The deadline is almost here! You’ve got about three weeks to organize all your paperwork and get your tax forms in to Revenue Canada.
But instead of rushing through the forms this year and focusing on just getting the annoying thing done, carve out a bit of extra time to make sure you’re really getting all the credits, deductions and rebates you can.
While zipping through your return is faster and perhaps less complex, you could be missing out on saving hundreds or even thousands this year, and in the years to come.
For me, hiring an accountant is more than worth the few hundred bucks he charges. But since I am self-employed, and that brings with it a huge list of extra deductions (and opportunities to make costly mistakes!), I’m not sure I could pull off my return alone anyway.
Even if you hire someone, or used a skilled family member to do your taxes (my brother did mine for years), it’s still helpful to know where your tax savings lie. You can use this knowledge to check up on your tax filers (if he or she misses some big ones, you know this person doesn’t totally know what they’re doing). More importantly, understanding your taxes means you’re prepared all year and you’ll do a better job of collecting the appropriate receipts.
(Here’s an FYI to help out. Tax credits reduce how much tax you pay directly. A $100 credit takes $100 off your taxes. But a deduction reduces your taxable income, so how much less you actually pay in taxes has to do with how much you earn and your tax rate.)
Here’s some tax-saving programs you should not be missing:
Spousal tax credit. If your partner is unemployed, a stay-at-home parent or makes a very low income, you can claim a spousal tax credit. This is a very big credit, the same as a personal credit — $10,382, for the federal portion alone, plus $7 to $14,000 more, depending on the province you live in. It’s also important to fill out your tax form properly and put certain deductions, such as child care expenses, on the lower income spouse’s return.
Childcare expenses deduction. Be sure you get all your childcare in here. If you use a regular babysitter, even someone in your neighbourhood, get a receipt and you can write that off too. As well, be sure you’ve applied for the Universal Child Care Benefit and the Canada Child Tax Benefit, which lead to mail-out rebates throughout the year.
Children’s fitness amount. With the price of kids’ activities these days (yes, I’m talking about hockey!) this credit is a boon to families who want their children to be active, but worry about the cost. Since you can get up to $500 back per child, it’s important to collect those receipts every time you sign them up for another activity.
Ones we’re just not using
Medical expenses. One of the least used tax credits. Possibly because the math is somewhat confusing. You can get a credit for expenses that exceed either $2,024, or 3%, whichever is lower, up to a set maximum. What’s also confusing is you don’t have to present receipts for medical expenses within a calendar year, instead you can choose the most expensive 12 months ending in the tax year you are filing. Oh yeah, and you can pool the family’s expenses and put it under the lower income spouse. You write-off medical expenses for other dependants like older children and extended family members on a separate line. Whew! This is a great credit, but one you should tap into after doing some reading or hiring an accountant.
Public transit. If a family member takes transit to school or work daily, their passes can lead to a tax credit. You do need to buy at least four consecutive weekly passes, and you can only write-off your children’s passes if they are under 19.
First-time homebuyers credit. If you just bought a home or are looking at purchasing your first home, do not miss this one! This credit is worth $5,000, and all you need to have done is buy your first home (yes, it can be a duplex or a condo). People with disabilities can also apply, even if this is not their first home, as long as the new place better suits their needs.
Taxes can be confusing, and taking advantage of all the credits and deductions available to you may take a bit more work and time with the calculator than you’re used to. Consider hiring a professional or using qualified tax software if you’re stumped. At the very least do your research on each credit you are applying for to be sure you’ve got it right. And as 2011 continues, remember to keep as many of your receipts as possible. You never know what could be a great write-off next spring.
Writer for RateSupermarket.ca