6 Ways to Save Money On Your Taxes

How to Prepare for Your Post-Debt Life-40

Canadians either love or dread the April tax deadline. While some are optimistic about places where they could possibly catch a tax break, so to speak, others in a haste to submit their return already fear missing out on potential deductions.

And while some of us clearly don’t have as many options as those who are self-employed, employees can get a bit of tax relief for some of their unreimbursed business costs. It is, however, a lot more difficult to find items to work with.

Here’s what to look for.

Claim the Employment Tax Credit

The employment tax credit is designed to help offset a small portion of the work-related expenses incurred by employees – for example, home computers, uniforms and supplies. For the 2016 tax year, the amount is calculated as the lesser of $1,161 and the amount of income you made during the year.

Oddly enough, you don’t have to actually incur expenses in order to claim this credit. And no receipts are required, assuming you’re actually out of pocket. You just have to be working for someone else.

Sure, your reimbursement may be equal to the price of a pair of decent concert tickets ($1,127 x 15 per cent = $174 in federal tax) but it’s certainly a good place to start.

Reduce your tax deductions at source

While it’s certainly a nice surprise, getting a large tax refund each year simply means you’ve remitted too much tax to the Canada Revenue Agency (CRA) throughout the year, essentially giving the government an interest-free loan.

If you expect to claim any deductions or non-refundable tax credits that will reduce your tax bill – RRSP contributions, rental losses, child care expenses or charitable donations – consider using Form T1213 and asking your employer to reduce the taxes withheld from your pay throughout the year.

Get recognition at work

You’re entitled to receive up to $500 annually in non-cash gifts or awards from your employer, tax-free. This is provided that they’re not performance-related awards (for example, an award given for meeting a sales target).

In addition, an employee can also receive, free of tax, a non-cash long service or anniversary award of up to $500 – as long as you’ve put in at least five years on the job.

Join the gym 

On-site workplace wellness programs are all the rage now. But your company may not have the space or means to put more than just some yoga mats in a meeting room.

The good news is that if your employer offers fitness memberships to an outside facility, this isn’t considered to be a taxable benefit – even if the employer has negotiated special rates for this service. The CRA has agreed that such membership fees won’t be taxable if the employer pays an external organization separately to provide the fitness facility to all employees.

Get some of those payroll premiums back

As you may know, typically, your employer has to take Canadian Pension Plan (CPP) premiums off each of your paycheques. However, job-hopping employees often end up paying too much over the course of the year. This is because each employer is obligated to withhold CPP without regard to what preceding companies may have done.

If you contributed more than you were required ($2,544.30 in 2016), the CRA will refund the excess contributions to you, provided you’re on top of things and make note of it on your return.

The same goes if you paid too much in Employment Insurance (EI) premiums ($955.04 in 2016).

If you contributed more than the maximum, any excess CPP premiums you paid should be entered on line 448 of the tax return. Excess EI premiums should be entered on line 450.

If you paid more than you were required, but did not surpass the maximum contribution, the CRA will automatically calculate any overpayment and refund it to you.

*It should be noted that the maximum contributions and tax regulations differ in Quebec.

Tally all your union and professional dues

One of the deductions employees often miss is the cost of belonging to a union or to a professional body as well as the cost of carrying professional or malpractice insurance.

Annual union dues don’t include initiation fees, licences, special assessments, or charges for anything other than the organization’s ordinary operating costs, however. So these cannot be deducted. And if your employer pays the fees for your professional memberships or insurance, they get to take the tax deduction, even if the receipt is in your name.

Filing your tax return can be a daunting task for those who are not well-versed. That’s why it’s best to seek professional help if you’re lost. And ensure to voice your opinion if you feel like there are areas where you could receive a deduction.

How will you be spending your tax return? Share with us in the comment section below or on our Facebook page!

 

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Personal Finance / Personal Finance News / Taxes / Uncategorized

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