Found 13 posts tagged as "Tax Credit"
Have you filed your taxes yet? With the big April 30 tax deadline just days away, some Canadians may be putting off the taxing paperwork until the last minute. According to an Intuit Canada survey, those living in big Canadian cities are more prone to procrastination than residents of smaller towns.
The results? Torontonians are the biggest tax procrastinators, while savvy Atlantic Canadians file the fastest to take full advantage of tax credits and refunds.
Based on the number of tax returns electronically filed with TurboTax Online between April 29 and 30, 2010, these are the top ten tax procrastinating cities cited by Intuit Canada:
1. Toronto - Canada's most tax procrastinating city, four years running.
2. Calgary - The second city of tax procrastination.
3. Vancouver - Our Olympic city takes bronze.
4. Edmonton - City of Champions shows propensity for procrastination.
5. Ottawa - The Nation's Capital is not far behind.
6. Montreal, 7. Mississauga, 8. Winnipeg, 9. Victoria, 10. Surrey.
But are we really a bunch of procrastinators?
Cleo Hamel, senior tax pro and national spokesperson for H&R Block, doesn't think so. In a recent blog post, she writes:
"Canadians are responsible when it comes to filing their taxes. We asked Leger Marketing to conduct a poll in March asking when people were planning to do their returns. The results surprised us. Eighty-six per cent of Canadians have already filed their 2010 tax return or plan to do so at least a week in advance of the deadline. Only 10 per cent could be considered true procrastinators."
Young Canadians are the quickest to get their taxes done, while those aged 45 or older are the most likely to procrastinate and file just before the deadline.
"I think some of this can be attributed to slips for some investments not arriving until the end of March. You can’t file without all your slips," she writes.
See 5 Surefire ways to trigger a tax audit for more of Hamel's tax filing advice.
Penalties for late filers:
Filing after the April 30 tax deadline will cost you. The Canada Revenue Agency (CRA) will charge you with a 5 per cent penalty on the balance owing, plus 1 per cent for each full month that your return is late, to a maximum of 12 months. The penalty is higher if you are a repeat late filer.
Your Turn: Are your taxes done? If not, what are you waiting for?
Kerry K. Taylor writes at Squawkfox.com, a blog where frugal living is fun. Kerry is the author of 397 Ways To Save Money: Spend Smarter & Live Well on Less.
Feel like talkin' to the tax man this year? I didn't think so. Filing your 2010 personal tax return before the April 30th deadline is a good way to avoid a run-in with the Canada Revenue Agency, but there are other ways.
Cleo Hamel, senior tax pro and national spokesperson for H&R Block, says there are a number of red flags that could cause the CRA to take a second look at your taxes, and many are avoidable. Here are five ways to trigger a tax audit:
1. Forget a T-slip, or two.
The CRA runs a matching program on all T-slips issued by employers, financial institutions, and benefit programs. Forgetting, misplacing, or not reporting all your income could result in a reassessment with stiff penalties.
"There are people who don't file all their income altogether," says Hamel. "They just put [their T-slips] to the side, thinking 'out of sight, out of mind' -- which generally is a problem."
The CRA will eventually find out and "slap you for it," she says.
2. Be extraordinary.
Making a claim that's out of the ordinary could send your return straight to the auditor's office. An extraordinarily large RRSP contribution is one trigger, and claiming higher than usual expenses is another, says Hamel.
"Keep within the norm, don't do anything too strange or out of the ordinary."
3. Claim massive medical expenses.
Be sure to keep all your receipts if you're claiming substantial medical expenses paid in any 12-month period ending in 2010 -- big medical bills can trigger a tax audit. Hamel has personal experience with this gotcha:
"My parents had some major dental work done one year, and it cost them around 20 thousand dollars," she says. "None of it was covered by insurance, all of it had to be claimed on a tax return, and within two weeks of filing we had a letter that said we want to take a look at those receipts."
4. Your business isn't a money maker.
The CRA doesn't expect new entrepreneurs to make a mint, but claiming extensive losses year after year could flag your return for a review, says Hamel.
"Anyone who's in business really has to be careful. If you're into your fifth and sixth year and you're still not making money, you may be opening yourself up to a problem because the CRA has an expectation that you are in business to make money, not to lose money."
5. You have a history.
Passing a random review may set you free from the auditor's gaze in the future, but a poor compliance history could flag your file for years to come.
If the CRA sends you a letter asking for receipts, Hamel says you must follow the directions, get the information to the CRA in a timely manner, and never miss a deadline.
"If you don't comply, chances are they're going to come after you the next two or three years trying to get you to comply properly. Do what makes them happy, and they won't come after you."
Kerry K. Taylor writes at Squawkfox.com, a blog where frugal living is fun. Kerry is the author of 397 Ways To Save Money: Spend Smarter & Live Well on Less.
When totalling your income and tallying your taxes this year, take a good hard look at the final numbers -- you could be making a tax mistake.
Cleo Hamel, senior tax pro and national spokesperson for H&R Block, says some mistakes could be costly, and most can be avoided by getting all the right information together. Here are five tax mistakes Canadians often make:
1. Not reviewing your final pay stub.
Are you paying premiums for your employer's private healthcare package? Better check your last paycheque for this payroll deduction -- you could be missing a lot of money by not claiming it on your taxes, says Hamel.
"Most people forget to include [healthcare premiums] in their medical expenses at the end of the year, because the number's on their pay stub, not on their T4."
2. Throwing away valuable receipts.
Is that piece of paper trash or treasure? If you're unsure, don't be afraid to keep all those crumpled and coffee-stained moving, medical, and child care receipts in an envelope or box, says Hamel. Small amounts can add up to big deductions, but you need proof if the CRA requests information or audits your tax return.
"I would rather have someone bring me a box full of extras than to ask questions and find out they've thrown receipts out because they didn't think they were worth anything."
3. Not claiming all your income.
All those T5, T4, and T3 slips report income that must be claimed, so don't forget to state all your employment income, EI benefits, pensions, and investment income on your return.
"The CRA gets copies of all of those slips," says Hamel. "So not filing them, they'll eventually find out and they'll slap you for it."
Even income earned outside of Canada must be claimed, says Hamel.
"Other countries communicate with Canada Revenue Agency and report pensions paid from ex-pats. So hiding income is not something that you can necessarily get away with."
3. Not transferring tax credits.
Don't make the mistake of claiming a tax credit if your income is too low to take full advantage of it. Many tax credits can be transferred to a spouse, or from a child to a parent, says Hamel.
For example, parents of a student can claim all or part of the tuition, education, and textbook amounts when transferred from a child.
5. Failing to claim all your tax credits.
There are a number of juicy tax credits Canadians should not miss, but omissions often happen. A big one that could help many qualifying Canadians is the disability tax credit, says Hamel.
"There are a number of Canadians who live with a disability, and if you don't know or have never been told, you may not realize that you qualify for disability credits."
To claim this non-refundable tax credit, form T2201 (Disability Tax Credit Certificate) must be completed, certified, and submitted.
"By having that form approved by the CRA, you could be saving yourself somewhere around $1,600 in tax," says Hamel.
Your Turn: Do you file your own taxes, or do you prefer to hire a tax specialist?
Kerry K. Taylor writes at Squawkfox.com, a blog where frugal living is fun. Kerry is the author of 397 Ways To Save Money: Spend Smarter & Live Well on Less.
You've filed your taxes and your big fat refund cheque worth hundreds, perhaps thousands of dollars, is cause for celebration. Claiming all your tax credits and qualifying expenses sure showed the Government of Canada who's boss, right? And who doesn't like getting free money from the Canada Revenue Agency each year? I don't.
A sizable tax refund may seem like a windfall from heaven, but it's really a disaster in disguise. Here's why:
You paid too much tax. Do the math. A big refund means the government took too much tax off your at source income during the year. For example, a refund of $1725 represents a $143.73 monthly overpayment, or around $72 across 24 paycheques. Wouldn't you rather have that cash sooner?
You gave the CRA an interest-free loan. Bet your bottom dollar you're paying interest whenever you take out a mortgage or loan from the bank. Overpaying your taxes to the CRA doesn't earn you a dime in interest though -- you're giving the government an interest-free loan. How generous of you.
The Solution: Form T1213
Go ahead and take a good hard look at your income tax paperwork this year. If you claimed any of these recurring deductions -- RRSP contributions, child care expenses, support payments, employment expenses, interest expenses on loans, charitable donations, or rental losses -- then you could qualify to reduce taxes straight from your paycheque. Here's how to do it:
Step 1: Download form T1213 Request to Reduce Tax Deductions at Source, and fill it out.
Step 2: Mail photocopies of your recurring deductions (RRSP contributions etc.) with form T1213 to your local CRA office. In my experience, it takes the CRA a few weeks to approve the request. See Stop giving the government an interest free loan (T1213) for my tax story.
Step 3: Send the CRA's approval letter to your payroll administrator at work. Your employer will reduce the amount of tax taken straight off your paycheque.
Your next paycheque should boast more income, fewer taxes paid, and reduce your annual interest-free loan to the good folks at the Government of Canada. Now that's a cause for celebration.
Your Turn: What are you doing with your tax refund this year?
Kerry K. Taylor writes at Squawkfox.com, a blog where frugal living is fun. Kerry is the author of 397 Ways To Save Money: Spend Smarter & Live Well on Less.
Pull out your stashed receipts and locate last year's bills -- finding the right paperwork could help you nab a juicy tax credit and reduce the amount you owe the tax man. The deadline for filing a personal income tax return is April 30 for the 2010 tax year, so don't miss claiming these five tax credits by letting a pile of unsorted paper defeat you.
1. Public Transit Tax Credit
Did you buy a ticket to ride in 2010? Then your monthly bus pass, commuter train card, or ferry fare could be your ticket to an easy tax credit. The rules are simple: Your pass must allow for unlimited travel for at least 20 days in any 28-day period -- so your daily passes are a no-go.
Because this is a non-refundable tax credit, the government won't be sending you a refund cheque in the mail. Instead, the amount claimed is multiplied by 15% and then deducted from your tax owed.
For example: If your monthly transit pass costs $125, the amount you could claim would be $1,500 for a tax credit of $225.
2. Moving Expenses
Shipping your stuff at least 40 kilometres closer to a new job or to your post-secondary institution could unpack you a tidy tax credit. There's a long list of eligible moving expenses -- including the cost of a mover, meal expenses, storage fees, legal fees for the purchase of a new home, and vehicle expenses -- so it could be worth it to hire an accountant so you don't miss a single moving cost. See the CRA's Moving Expenses you can deduct for the details.
Along with moving expenses, students can also claim a myriad of other credits. See 8 Reasons even broke students should file a tax return for the tax-reducing details.
3. Disability Tax Credit
Canadians with a severe and prolonged mental or physical impairment may be eligible for a $1,086 federal tax credit. The disability must be certified by a medical professional to 'markedly restrict' your ability to perform a basic activity of daily living, such as speaking, hearing, walking, and feeding.
Answer the CRA's questions to see if you're eligible.
Canadians under the age of 60 who qualify for the Disability Tax Credit are also eligible to set up a Registered Disability Savings Plan (RDSP) -- read Canadians with Disabilities Have a New Way to Save to see if you qualify for the RDSP grants and bonds.
4. First-Time Home Buyers' Tax Credit
Did you buy your first home last year? You may qualify for a non-refundable tax credit of up to to $5,000, reducing your tax owed by $750. Read the CRA's fact sheet to see if your new place qualifies.
5. Children's Fitness Tax Credit
It doesn't matter if your kid is a toddler or a tween for the Children's Fitness Tax Credit to pay off. Parents of children involved in sports and fitness activities under the age of 16, including babies, can claim up to $500 per child per year. Keep all your sports receipts and documents when claiming this non-refundable tax credit -- you may have to prove your toddler's swimming lessons or your teen's dance club contains a valid fitness component.
See Three big tax-saving tips for your family for more kid-friendly tax saving tips.
Your Turn: Do these tax credits help? Which ones will you claim?
Kerry K. Taylor writes at Squawkfox.com, a blog where frugal living is fun. Kerry is the author of 397 Ways To Save Money: Spend Smarter & Live Well on Less.
Canadians are a generous bunch. According to Statistics Canada, around 5.6 million Canadians made a tax-deductible charitable donation in 2009 -- that's $7.75 million given to charity, around $250 per donor.
With over 85,000 charities registered with the Canada Revenue Agency, it can be challenging to choose the one worthy of your money, especially with charity scams working overtime this holiday season.
Before writing that generous cheque, answer these five questions to be sure your gift goes into the right hands.
Question 1: Is the charity registered?
Before donating a single dollar, search the Canada Revenue Agency's Registered Charities Database to confirm whether the charity is operating legally, or if their license has been revoked -- either voluntarily or "for cause." The CRA will cancel a charity's registration if an audit reveals irregular activities.
Question 2: Is the donation tax deductible?
One of the perks of being generous is that you earn a tax credit for eligible donations. To be eligible, the donation must be made to a registered charity (see Question 1) that can legally issue an official donation receipt for income tax purposes.
According to the CRA, official donation receipts must include the following: your name and address, the charity's registration number, the amount of the cash donation, and a unique serial number.
The more you donate, the larger the tax credit. The first $200 you donate is eligible for a federal tax credit of 15 percent of the donation amount. After the first $200, the federal tax credit increases to 29 percent. Just be sure to keep all your receipts.
Question 3: What percentage goes to administration?
Ever wonder how much of your donation goes to help a cause, and how much goes to administration fees? MoneySense magazine created The Charity 100, Canada’s first charity grading system, to answer this question.
MoneySense assigns grades to each charity and measures how well they compare to others in their sector. Some charities received lower grades due to their high administration fees and fundraising costs. It's a great tool for doing your research before dishing out a donation.
Question 4: How will the charity use your donation?
Don't be afraid to ask how your donation will be used. Will your money go towards food, shelter, medicine, or something else? Will the cash be spent this year, or ten years from now? If your donation is earmarked for further fundraising costs or printed materials, it's best to be aware of this before donating a dime. If you're unimpressed with the answer, find another charity to support.
Question 5: Is there pressure to donate?
Whether your phone rings off the hook or someone knocks on your door, don't let a pressured sales pitch force you to donate. And do not donate if the prospective charity offers to send a courier or runner to your home. Take the time to research a charity completely -- if they need your cash today they will happily take it tomorrow.
Your Turn: How much do you donate to charity?
Kerry K. Taylor writes at Squawkfox.com, a blog where frugal living is fun. Kerry is the author of 397 Ways To Save Money: Spend Smarter & Live Well on Less.
By Ijeoma Ross, YourMoney.ca
The harmonized sales tax goes into effect in Ontario and British Columbia July 1. Instead of GST and a provincial sales tax being added to your purchases at the cash registered, there will only be one combined tax.
In Ontario the tax will be 13% – 5% GST plus 8% provincial retail tax. In B.C., the HST will be 12% because the provincial sales tax is 7%.
B.C. and Ontario join Nova Scotia, New Brunswick and Newfoundland as HST provinces.
Who will be affected?
All residents of B.C. and Ontario and companies based in those provinces.
How does it work?
The HST is collected by the federal government and will charged on most things on which you currently pay GST. There are some exemptions including basic groceries, children’s clothes and shoes, diapers and feminine hygiene products that will not have HST applied to them.
 The best part about filing a tax return is dreaming about how to spend your refund. Who doesn't like a big lump sum of money? But once that cheque is cashed, there seem to be endless possibilities for the money. Should you save it in an investment? Spend it on shoes? Or pay off that credit card?
"The money that comes from a tax refund should be treated as any other surplus lump sum of cash that magically finds its way into your hands," says Preet Banerjee, a W Network Money Expert and popular personal financial blogger at Where does all my money go?. "If the final use of the refund increases your net worth, it's a step in the right direction."
Banerjee shares his three simple rules for wisely spending your tax refund. Rule 1: Disaster-proof your life
Having some spare cash stashed in an emergency fund is one sure-fire way to protect yourself when you're between jobs, but are you prepared for financial disasters like disability or death?
"By disaster proofing I'm referring to addressing danger areas that could devastate your finances," says Banerjee. "You are much more likely to become disabled for an extended period of time before age 65 than dying. If that happened and you didn't have disability insurance - you're beyond screwed."
 It's that time of year when final exams weigh on the minds of students. But taking a study break to file a tax return could put you at the front of the class with a smart tax refund.
For students with very little income, filing a tax return can offer big advantages other than a refund, since it's the only way to receive all benefits available. Here are eight reasons why every student should file a tax return:
1. Get the GST/HST Credit: Students 19 and older must file a tax return to qualify for the GST/HST credit -- a tax-free quarterly payment that assists low income earners by offsetting the GST/HST paid. To receive this credit, students must apply for it each year when filing a tax return, even if there is little or no income to report. Visit the CRA to calculate your GST/HST credit.
 Doing family taxes can feel like pulling teeth, especially when the household budget is tight and the tooth fairy still needs to be paid. But you don't need a magic wand or a set of wings to find tax savings, you just need to know where to look.
Deborah Shure, owner and founder of Shure Consulting Services - NannyTax.ca, is no stranger to finding family tax breaks. As a mother of three young children, she's made it her business to find savings every tax season. She shares her three favourite tax breaks that benefit families of all sizes and ages. Need a family or household budget? This series on How to Make a Budget gives free downloads and helpful tips.
1. Children's Fitness Tax Credit
If you've got an active kid involved in sports and fitness activities, then don't miss out on claiming up to $500 per year per child for the Children's Fitness Tax Credit. This non-refundable tax credit is based on eligible expenses paid by parents for children under 16 years of age, including babies.
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