Belmont Buzz

Gimme a Break! Tax Breaks you may be missing out on - 2020 edition

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Gimme a Break! Tax Breaks you may be missing out on - 2020 edition

It’s that time of year again! It seems like we’ve just rung in the New Year and now the tax man cometh!  Every year, millions of Canadians file their taxes, and every year thousands of dollars’ worth of tax breaks are missed. Below are some overlooked tax breaks that everyone should know about, as well as a few additional tips!

 

    RRSP as immediate tax relief – Any Canadian who has collected a paycheque should file a tax return and start building an RRSP. You are able to contribute 18% of your earned income from the previous year, to a max of $26,500.00. You’re allowed to contribute to your RRSP in the first 60 days of the calendar year and apply the deduction to your prior year’s tax return. This can help offset expenses if you end up with a tax bill you weren’t prepared for! Additional advice: Do you know how much you’ll contribute to your RRSP this year? Skip the refund at tax time and file a T1213 – Request to reduce Tax Deduction at Source. This will reduce the tax deductions on your paycheque.

    Childcare expenses – Childcare has become one of the largest tax deductions for working families. Generally, the parent who has earned the least amount is the one who would make this claim. Additional advice: Did you know that most overnight camps and summer day camps are also eligible for the childcare deduction?

    Moving – If you had to move due to a new job, these are taxable deductions, from the movers you hired, or the moving van you rented, or even the boxes you purchased. The commissions you had to pay on the sale of your former home (if you owned it) are also a tax deduction. Also, if you moved to attend school full time, guess what? Another break for you! (A stipulation of this credit is that you must have moved at least 40km to be closer to your new work or school) Additional advice: You can also deduct the costs of maintaining a vacant former residence.

    Tax credits – Tax credits are different than tax deductions and have two types: refundable and non-refundable. A non-refundable tax credit is applied directly to your tax payable. That means if you owe 500.00, and get a tax credit of 200.00, you now only owe 300.00. However, if you don’t owe any tax, there’s nothing to apply the credit to and you don’t get it. A refundable tax credit, such as GST/HST credit, means you receive the credit even if you don’t have any taxes owing.

Common tax credits include basic personal amount, spousal amount, and age amount. However, other eligible tax credits include Volunteer firefighter, adoption expenses, interest paid on student loans, tuition and education amounts, exam fees, medical expenses (some conditions apply), charitable donations and donations to political contributions.

 

Being aware of the tax breaks available to you can help you get a better return than you imagined. Get your money back, Canada! What are some tax breaks you know of that may not be common knowledge?

| Categories: Wealthy Ideas | Tags: tax, tax season, breaks, deductions, credits, tax man | Return
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