Every Canadian wants to pay less tax. And the common goal at tax season is to claim every credit and deduction to minimize the tax bite. There are some simple steps you can take to reduce your tax liability. Missing a deduction or making an error means you are paying the taxman too much. Cleo Hamel, Senior Tax Analyst with H&R Block Canada offers the following tips on how to make the most of your tax return:
- File a tax return even with no income: There are benefits like the GST/HST Benefit and the Canada Child Tax Benefit (CCTB) that are calculated based on your last tax return filed. Depending on where you live, you may also be eligible for provincial benefits. You do not need income to qualify for these benefits but you need to file in order to receive them. Both parents have to file in order to receive the CCTB. [See: Filling A Tax Return When You Don’t Owe Anything]
- Track down receipts: Missing a credit is like leaving money on the table. If you have misplaced receipts, it is worth the extra time to track them down.
- Pool receipts: Married and common-law spouses may be able to pool charitable donations and medical expenses to maximize their tax savings. Same applies to the Transit Pass Credit and families. Parents can claim passes for children under 19.
- Extra credit for first time donors: New for 2013, the First-time Donor’s Super Credit is meant to encourage donations by people who have not donated to charity before, or who had fallen out of the habit. If you haven’t claimed a donation receipt since before 2008, your donations could receive an extra boost in 2013. For first time cash donations made after March 20, 2013, you can claim 40% per cent on the first $200 of donations and 54 per cent for donations between $200 and $1,000.
- Charitable donations: For more regular donors, the standard federal tax credit for charitable donations is 15% for your first $200 of donations and 29% on donations over that amount. And you can pool your receipts for up to six years to help maximize your tax savings. Plus you will receive additional provincial savings.
- Claim the kids: Children come with a variety of tax benefits. For example, parents can claim the Child Tax Credit which amounts to $2,234 for each child younger than 18. This results in $335 in tax savings per child. Remember the Children’s Fitness Amount and Arts Amount can both be claimed by either parent but cannot exceed $500 respectively in total per child.
- Benefits for caregivers: If your parent or parents are 65 or over, have less than $19,435 in income and are living with you, you may be able to claim the caregiver amount. The key is that they must live with you. Sending money from afar to support them does not qualify. You can also claim parents under the age of 65 if they are dependent on you due to an infirmity. In this case the income threshold will be $21,864. The caregiver amount is increased by the $2,040 family caregiver amount when the dependant is infirm.
- Get organized for next year: If you haven’t already, start an envelope or folder to hold all your 2014 tax slips and receipts. Next year, it will save you the time and hassle of trying to track down receipts and gather the necessary documents.
If you have any tax-related questions, you can ask a question online at http://taxtalk.hrblock.ca/ask-us-a-question or visit an H&R Block office in your neighbourhood where a tax professional can help you and would be happy to review your previous year’s return for free. If you want to file your own return, visit www.hrblock.ca to try H&R Block Canada’s new Tax Software. The software will guide you through step-by-step tips to identify every possible deduction or credit, calculates your return as you go, and ensures you get your maximum refund.