How to Maximize Your Tax Deductions
Spring is a beautiful season. It’s a season where the temperature slowly rises, the snow begins to melt and flowers start to bloom. Summer is fast approaching and for the majority of Canadians, we cannot wait!
Spring also signifies that Tax Season is in full swing. We hear the advertisements on the radio, television, read them in the newspapers and see them on our favourite websites. The advertisements are generated by Accountants and companies producing tax software. Most Canadians do not like paying taxes and hate filing their taxes annually. They procrastinate and put off their tax filing until the very last minute on the annual deadline of April 30.
Most Canadians are employed in a full-time job and are limited to the amount of tax deductions they can take advantage of. With proper planning and a bit of knowledge you will be able to Maximize your Tax Refund.
Here is a list of some tax tips:
-Read and keep your notice of assessment. There may be some tax credits carried forward which are available to you such as tuition, capital losses, medical, etc… The notice of assessment also tells you how much you may contribute to your RRSP.
-Every year the Government of Canada spends millions of dollars in advertising the latest tax credits available to you. Pay attention. Were you aware of the 2009 Home Renovation Tax credit?
-Hire a professional Accountant to prepare your taxes. Accountants keep up to date with the latest tax changes from the current budget. They will ask you about your family situation and financial situation. They do charge fees for their work, but believe me, its money well spent.
For example, when was the last time a Government official called you at home to advise you that if you had contributed an extra $1000 to your RRSP, you could have saved $400 in taxes? Your Accountant will.
Better Tax Services
http://www.bettertax.ca
Tax Deductions FAQ:
Question: I am employed as a visiting nurse in Ontario Canada. What can I claim for tax deductions?
Answer: If you have been employed as an employee then your options for deducting are limited. You would have to get a form from your employer detailing what you were responsible for. This form is called T2200 conditions of employment.
If you created your own business and were providing services on a contract, a number of deductions open up: office expenses, supplies, motor vehicle.
Question: In Canada are private school tuition fees a tax deduction either in part or in whole?
Will I be able to claim some or all of the fees paid for tuition for my kids private school on my tax return?
Answer: Mostly not. If there is a childcare component to the fees, that is potentially a deduction for child care expenses. If it is entirely tuition for school, it isn’t deductible, unless it qualifies as a tuition and education deduction for post-secondary education or trades training.
If it is a special school due to medical needs or disability (for instance, ADHD) then it may qualify as a medical deduction.
Question: Canadian income tax question re: deductions for separated dad’s?
I am getting shafted by Revenue Canada. I pay support, have my 2 boys for 50/50 custody. Claims are disallowed for dependents (even one ), and being told to pay out thousands in taxes, and the interest is usurious! Any advice out there?
Answer: If you are ordered to pay support for a child, you cannot claim that child as a dependent under any circumstances. This applies even if the support is not deductible, which it wouldn’t be if the order is written after April 1997.
It might not seem fair, and I’m not going to get into whether the law is fair, but it is the law. It’s written into the Income Tax Act as section 118.3, and the rules are not negotiable. Also, Revenue Canada is only following rules, not making them. That would be the Department of Finance.
Question: At what income figure you start being taxed in Canada/Quebec?
I have a decent income while my wife has a very small income. This is about my wife’s income, I am wondering how much would she have to earn per year in order to start getting taxed. Example: My wife makes 5k a year from baby-sitting, will that be taxed? Continuing with the example, if we declare 5k for her, will I get an additional 4k of tax deduction from my income? (I understand that it’s 9k per dependent, so 9k – 5k = 4k)
Am I somewhat correct or am I terribly confused?
Answer: $5000 is under the Personal Non-refundable tax credit of $10320 for 2009, so she would not have a balance due on her return. As for your return, you are talking about the Spouse Non-refundable Tax Credit on line 303. It’s not “9k”, it’s $10,320 less the amount of her income on HER line 236. You are terribly confused, what you need is to sit down with your tax preparer and have a long talk.
Question: How to file taxes as independent worker/contractor in Canada?
I worked from October till end of December as what they would call an independent contractor. I wasn’t a contractor but that’s what I’m considered. I have no idea how to file my income tax, or what deductions I can include. Can anyone help me? I can’t afford to go pay an accountant to do all of this. My income is only around $3,000 for the year. Every year I do my taxes online by myself and this year I’m having troubles because I worked as an independent contractor. I am again working as an independent contractor as of last week so I really want to know how I do my taxes and even what I should be saving for deductions for next years taxes.
Answer: If you done your taxes before it is pretty much the same thing except you will be reporting your income on a business statement called a T2125. This form allows you to declare your income than deducted expenses then the net amount is carried over to line 135 of your T1. The form has a list of deductions that you can claim. This year if your total income for the year is $3000 than you wont be taxable and you don’t have to worry about your expenses, but remember if your income goes up another year you will be liable for your taxes and as a self employed individual there’s no deductions at source. You will also be responsible for paying CPP on any income over $3500 which is charged at a rate of 9.9%.
Question: Can I get my Pay-stubs re-printed for an entire year.?
I Just received my T4 slip for the year, and I am almost positive that the amount of deductions has been altered, alot. Is there anyway I can get a reprint of all my paystubs for the last year, and possibly even farther back so I can calculate the actual deductions taken off of my paychecks. I am only seventeen, and live in Canada. I should be getting all my income tax back, and I have been losing a large chunk of my income to deductions.
Answer: You can ask you employer, they may or may not want to share. You should be given a paystub with every cheque. The employer is obliged to give you a pay statement with every cheque, but there is no obligation for them to give you new copies.
If you think the amounts are wrong, you should tell your employer, and they can review the amounts. Most employers are reasonable, and will co-operate.
If your employer is not willing to discuss the matter with you, and you really think the amounts are incorrect, you can call CRA and tell them you think the T4 is wrong. If they think there is something worth looking into they can send an auditor to review the employer’s records. If they find errors in the T4 slips they will make corrections and issue revised T4 slips.
Question: I have a work opportunity in Canada but i keep hearing about their Extreme taxes?
It can be said that the average deductions in the US are about 30%, what is Canada’s average? Would I have to file a tax return for Canada for this year? It is a three month job for about 35k gross.
Answer: If you are an USA resident, and would be working here temporarily, then you would report it on both a US and Canadian return. We have a tax treaty with the USA, and you would get back the Canadian tax that was withheld, and would pay USA tax on the income. If the USA tax is lower than the Canadian tax, I think we might keep the difference. If the income here is exempt from USA tax, you would pay tax here.
Our tax rates seem extreme compared to USA, but low compared to Europe. Our taxes are lower than what most Americans pay for tax plus healthcare. Our taxes include healthcare.
Question: In Canada, is international volunteer work tax deductible like in the US?
I’m looking at volunteering next year in Cambodia or Tanzania and the organization I’m currently reading about claims that all volunteer expenses (including airfare, accommodations, etc) are 100% tax deductible in the US. I’ve tried to find information online about Canada’s volunteer tax deductions but I haven’t been successful. Just wondering if anyone out there knows if/what any options for Canadians wanting to volunteer abroad are!
Answer: The only time expenses are tax deductible by an employee is when your employer completes the form T2200 that stipulates that they are employment expenses. However, if you are a volunteer and not being paid, there is no income to deduct the expenses from. Also, because it is for outside of Canada, it would have to be recognized by the Government of Canada, ie: UN worker.
There is no such thing as a “volunteer work tax deductible”.