Tax-savvy students can save thousands
Globe and Mail Update
Last updated Thursday, Apr. 07, 2011 9:20AM EDT
As a student, Kerry Taylor saved thousands of dollars by keeping track of available tax credits and not losing tax certificates and forms. Ms. Taylor says completing her tax return using the applicable credits helped to lower the taxes she paid, decreasing the amount she had to borrow for her education.
In her book 397 Ways to Save Money, Ms. Taylor shares how she saved even more by taking her unclaimed educational credits and carrying them forward to use against her income when she started working. If you’re a student, or were recently a student, run through the list below of the most common deductions and credits for students to see how they benefit you.
If you’re taking transit to and from class, hang on to your receipts, especially if paying by cash. You’ll need them to back up your claims for the public transit tax credit. You’re also eligible to deduct moving expenses if you’ve moved at least 40 kilometres to attend school or for summer employment.
The average student debt for the 2005 graduating class was almost $20,000, according to Statistics Canada. To ease the burden even slightly, you can deduct the loan interest on provincial and government loans. If you’re not claiming the deduction this year, you can carry it forward for up to five years.
Tuition and textbooks
As a full-time student in a qualifying program, you may be able to claim a $400 monthly education amount. Scholarships and bursaries are exempt from tax when earned in relation to a program where you receive the education tax amount credit. Tuition fees and text books can also be claimed. Check the Canada Revenue Agency website for additional benefits available to you as a student.
Unused tax credits
A general idea of what you’re eligible to claim, along with documents to back up your claims, will make tax time as pain free as possible. Tax software will walk you through the process step by step, and consulting a tax professional will ensure you’re not missing anything you’re entitled to. If you don’t claim your tuition or textbook credits this year, for example, they can be carried forward to reduce taxes in future years when income is higher.
For ease as a student, to access your history and manage your taxes online, update your My Account profile online. And if you’re a keener with an extra hour or two, you can take an online class to nail the basics of filing your taxes and maximizing your claims.
Angela Self is one of the founders of the Smart Cookies money group.
*In my opinion, financial literacy should be a core element of the education system – from elementary students to university students. What do you think? Do you buy finance books?