5 tips for filing taxes
If you’re not yet aware, income taxes are due for Canadians on April 30. However, due to recent technological glitches in a secure server network, the Canadian Revenue Agency extended the deadline to file without penalties to May 5.
The security breach defect known as the “Heartbleed bug,” has dismantled the security of the CRA’s website, shutting it down and making it impossible for Canadians to file taxes online.
As tax day is approaching quickly, we came up with 5 tips for filing taxes to help get you through the season. (Tip: Depending on the situation, you may be able to claim a new vehicle purchase!)
1. File even if you don’t think you need to, and file on time
This is a misconception among those who don’t earn much or any income, and can end up costing thousands of dollars in benefits and credits, like the Canada Child Tax Benefit and GST/HST. If no return is filed, no benefits are sent. Teens who earn just a few thousand dollars should also consider filing to create RRSP room that can be carried over to use when they will owe taxes.
2. Paying student loans can mean a tax break
Those paying off student loans are likely paying interest, and that interest can be claimed in the form of a tax refund. You can also carry any interest on student loans for up to five years. For example, if you paid student loan interest in 2001, you could claim it on your 2006 taxes.
3. Claim medical expenses, and know the changes
In addition to the traditional claims for payments to a doctor, dentist, nurse, hospital and medications, you can also claim expenses for laser eye surgery, hearing aid batteries and special foods for those with Celiac disease, so long as these expenses exceed 3 percent of your net income. You can also claim payments made to a caretaker or money spend toward modifications to your home to accommodate a person with a disability.
4. Consider making a $2,000 contribution to your RRSP
You’re allowed to put up to $2,000 more than what you’re eligible for into your RRSP without paying any penalty. You can’t deduct the $2,000 over-contribution, but that over-contribution can be deducted in future years when your actual RRSP contribution is less than the maximum you’re allowed to add.
5. Consider “firsts”
Firsts, such as starting a career, getting married or buying a house can count toward a major refund as long as you file correctly. First-time home buyers in Canada can claim a $5,000 credit, which equals about a $750 tax savings. There is no receipt needed, you just need to prove you bought a house in 2013 if asked.