If you have just finished school, and are just starting out your professional life, you might be wondering what tax strategies and credits you should take advantage of. Learn about some of the basic things you should consider.
1. Tuition Tax Credit
There is a tuition credit for the amount of tuition paid. When you’re a student, you usually don’t have enough income to use the full credit. Any unused tuition credits are carried forward and can still be claimed in future years. If you’ve finished school and begun working, the credits can be claimed and applied to both current & future taxes payable. These credits are also transferable to a spouse or a parent who have a tax payable. If you check your notice of assessment, you can see how much credit you have available to use. These credits are also available for textbook amounts and the full education amount.
2. Student Loan Interest Credit
Maybe you haven’t paid your tuition; perhaps you have student loans instead. There are also tax credits you can take advantage of from your student loans. The interest owed on student loans is eligible for credit and can lower the amount of your income tax. In Ontario, it’s about 22% credit of the yearly interest and the credit can be carried over for 5 years. For example, let’s say you have paid $1,000 in student loan interest; the credited amount that you will receive is $220 to use toward your taxes.
3. Public Transit
If you use the public transit, like take the bus, the subway, or streetcars,
Make sure you claim your weekly or monthly bus passes, or electronic payment cards because the can be claimed for a tax credit towards your return. You would need to keep the passes themselves that have the date valid, amount paid and transit name, but if you do not have that information, keep the receipts or bank statements indicating the amount to file your return.
4. Employment Expenses
Sometimes, you have certain employment expenses that are necessary in order for you to perform your job duties, such as: supplies, uniforms, home computers or software. Your employer must complete Form T2200; Statement of employment expenses and you will be eligible to deduct them from your tax return. Your employer must not reimburse these expenses, and they must be necessary for your job
So Here’s the Tip:
If you just finished school, make sure you take advantage of the tuition credits that are available to you. If you pay interest on student loans, there is also a tax credit available on the interest paid. Remember to claim your transit passes and employment expenses because they are also eligible for a tax credit towards your return.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.