This article originally appeared on the SimpleTax blog. SimpleTax has joined Wealthsimple to become Wealthsimple Tax. Now you can invest, trade, save, and do your taxes all in one place.
If you're currently enrolled in university or recently graduated, then you're probably in a pretty low tax bracket to begin with. But here are 4 tips on how to reduce your tax bill even further and maximize your savings.
1. Carry-Forward Your Unused Tuition, Education, and Texbook Amounts
The tuition, education, and textbook amount is the “most obvious” tax credit available for students. It is made up of three parts: the tuition you paid, an education amount, and a textbook amount. Your institution will usually send you a T2202A slip, which will list the tuition you paid in the year as well as the number of months you were in school.
This is one of the few tax credits that is transferrable and that can be carried-forward to another year. If you can’t take advantage of the entire credit this year—e.g., because your income isn’t high enough—you can transfer part of the unused portion to a family member and/or you can carry-forward any unused amounts to another year. SimpleTax automatically calculates these amounts for you.
Because of these valuable tax credits that you can carry-forward, we suggest that you file a tax return even if you aren’t earning any income!
2. Claim a Credit For Your Public Transit Pass
Several Canadian universities include a universal transit pass in their fees for the year. You can get a tax credit for this amount! Most universities and colleges let you download your fee assessment for your transit pass through your online services account.
Even if your school doesn’t offer a transit pass, if you purchased eligible transit passes in 2012 and you kept your receipts, you can claim this public transit credit too.
3. Most Scholarship Income Is Not Taxable
You might be hearing conflicting things about whether your scholarship income is taxable. Good news, since 2007 most scholarship income is not taxable!
If you are enrolled in a full-time program, your scholarships, fellowships, and bursaries are not taxable up to the amount required to support you in the program, and if you are enrolled in a part-time program, your scholarships, fellowships, and bursaries are not taxable up to the tuition fees and costs incurred for program-related materials. Research grants, on the other hand, are generally taxable.
Regardless of whether your scholarship, fellowship, and bursary income is taxable, it’s likely that you’ll receive a T4A slip for this income. SimpleTax has a dedicated scholarship section that will walk you through the rules and help you make sure you only report the taxable amount.
4. Claim a Deduction for Your Moving Expenses
If you moved to study in a program on a full-time basis and you have earned research grants, or any taxable scholarship, fellowship, or bursary income, you can claim a deduction for moving expenses for attendance in your program up to the amount of your taxable research grants, scholarship, fellowship and bursary income.
If you moved to start a new job or business (even a summer job), you can claim a deduction for moving expenses up to the employment or self-employment income you earned at the new location.
To claim moving expenses, your new home must be at least 40 kilometres closer to your new school or place of employment than your old home.