We’re getting closer to the time of year when the Canada Revenue Agency awaits your annual income reports. From there, they will determine whether or not you are income tax receivable or income tax payable.
What’s the difference, you ask? Income tax payable means that you must pay the government within one year, and income tax receivable means that you will be getting a return from the government.
We’re guessing you’d like to increase your chance of a return, so here are a few ways to ensure that happens:
- RRSP’s and TFSA’s
You’ve heard just how valuable these two accounts can be to your finances, but did you know the amount of money you put away each year can actually help you with a tax break? You will not have to pay taxes on earnings in your TFSAs, and if you choose, your RRSP savings can be deducted from your taxes.
- Charitable Donations
If you have donated any amount over $200, you are in luck. Charitable donations are a great way to seek an income tax return. If you want to amp that dollar amount up, you are allowed to compile and save receipts for 5 years to return all at once. Be sure that each donation and tax receipt is from a legitimate organization and that their charity number is included.
- Medical Expenses
Paying for medical expenses can greatly impact a family’s budget and overall spend, but what many people don’t realize is that a lot of them are tax refundable. Not only medical expenses for injury or accidents, but also for food allergies (such as gluten free). Check out the government’s full list of eligible medical expenses.
- Children’s Expenses
If you work full time, and also send your children to a daycare, the government takes this into consideration during tax season. Submitting receipts for these costs can save you money. Not only that, but there is also a fitness and art tax credit for any child under the age of 16. Although, 2016 is the last year you can claim these on your tax return. This claim can be made if the amount does not exceed $250 and $500 limits. Guitar lessons? Soccer fees? These are covered.
- First Homes
Have you purchased a new home recently? There is a non-refundable tax credit for anyone who buys in the tax year. This amount is usually $5000, and can be claimed as long as you have all of the necessary paperwork.
Overall, there are a ton of tax breaks that you can use to help you during a tough year. If you do receive a return, remember to have a financial plan put in place for that money. If you are currently going through debt repayment, the best plan would be to put that money directly towards that cost. If you do not receive a return, be prepared to take care of any financial costs that are associated with your payable income tax.
One bonus way to ensure a return on investment for spending? Head to any Canadian National Park for free this year. It’s one of the easiest and most beautiful ways to guarantee you are getting something in return for being a loyal and proud Canadian.
For more information on taxes and the do’s and don’ts, go to the CRA website.
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