Barry Choi: Here’s how to file your taxes for the first time as a student

Be sure to keep these tips in mind for your first comeback

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The tax return is not a subject taught at school, but each student will eventually have to file a return. Although you can ask your parents for help, learning to manage your taxes yourself might be a better idea.

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The good news is that most students have a quick and easy tax return to complete. However, there are a few tips and tricks that will help you maximize your return.

Prepare yourselves

There’s no reason to do your taxes by hand these days. With NETFILE, the government’s secure tax return service, you can file online with approved software. To file your return, you will need a NETFILE access code, which can be found on the Canada Revenue Agency (CRA) “My Account” page or on your notice of assessment for the previous year.

Additionally, you will want to gather all of your supporting documents, such as tax returns, receipts, and your tuition registration certificate.

The deadline for filing personal income tax returns is normally April 30. However, as it falls on a Saturday this year, the CRA has extended the deadline to May 2. For those who are self-employed, you have until June 15 to file your return. If you owe taxes, you have until April 30 to pay.

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If you haven’t already, be sure to sign up for direct deposit in your CRA account. With direct deposit, any tax refunds owed to you (or credits to which you are entitled) will be automatically deposited into your bank account.

Find out about your tax credits

Tuition is the biggest expense for most students. Fortunately, the amount you pay for your tuition can be claimed as a non-refundable tax credit. This means that if your tuition costs exceed the taxes you owe, the credit can reduce your overall tax burden.

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To claim tuition tax credits, you must be at least 16 years of age and enrolled in an accredited educational institution in Canada. This includes post-secondary schools and trade schools. Those who attend a qualifying school outside of Canada full-time for at least three weeks may also qualify for the tax credit. That said, if you have an employer who reimburses your tuition, you cannot claim anything.

To certify that you are enrolled, you must obtain a T2202 – Tuition and Enrollment Certificate from your school. This document can usually be downloaded directly from your school’s website. Alternatively, you can ask your school’s admissions office for help.

When filing your taxes, any remaining tax credit can be carried forward to the next year. Alternatively, you can transfer up to $5,000 of the tax credit to your parents or grandparents, minus the amount you used. This can be very advantageous because students are usually in a low tax bracket, so they don’t owe much tax, if at all. By transferring the tax credit to a relative, he can reduce his taxes owed.

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Note that you cannot transfer your tax credits to your parents or grandparents if you have an eligible spouse or common-law partner. It must be transferred or deferred to them.

Your RRSP may not be necessary

While it’s never a bad idea to start saving regularly for your future at a young age, it may not always be beneficial. If you were to contribute to your Registered Retirement Savings Plan (RRSP), your taxable income would be reduced by an equal amount. For example, if you earned $10,000 last year and contributed $1,500 to your RRSP, your taxable income for the year would be $8,500.

Having a lower tax burden is good, but Canada has a marginal tax system: the more you earn, the more taxes you pay.

For the 2021 tax year, the basic non-refundable tax credit, also known as the federal personal tax amount, was $13,808. Each province and territory also has a personal amount that is added to the federal amount. These amounts provide a base level of income that is not taxable.

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The income of many students does not exceed the personal amount. Even if they did, they would likely end up in a lower tax bracket. This means that RRSP contributions are less important since students generally have a low tax burden. That said, you can still contribute to your RRSP and claim the tax deduction at a later date when your income is higher.

It’s worth mentioning that you only get RRSP contribution room after you earn income and file your tax returns. If this is your first tax return or if you have never earned income, you will not have any RRSP contribution space available.

Go get help if you need it

When filing your tax returns, you should only use CRA-certified tax software. The government has a list of free and paid certified tax software on its site.

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The tax software will guide you through the tax filing process. Most software will even find any qualifying credits you may be entitled to and automatically apply them to your tax return.

If you need additional help, there are often tax clinics that will file student tax returns for free. Plus, all TurboTax products are free for those 25 and under this year.

Additional tax tips for students

  • If you moved at least 40 kilometers to go to school full-time, you may be able to deduct some of your moving expenses, such as moving expenses, storage costs, and temporary living expenses .
  • If you qualify for the GST/HST credit, a quarterly payment of up to $456 if you’re single or $598 if you’re married or common-law, you’ll get it automatically as long as you file your taxes.
  • Residents of Alberta, Saskatchewan, Manitoba and Ontario may be eligible for the Climate Action Incentive (CAI), which is a quarterly payment.
  • Child care expenses can be claimed if you paid someone to care for your child while you were at school or working.

Finally, the CRA will never contact you to ask you to pay in cryptocurrency or gift cards the taxes due. They will also not apply for benefits on your behalf over the phone. If you are ever unsure of the legitimacy of CRA notices, you can call the CRA directly for more information.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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