Many students in Ontario really want to work during the summer months to help pay for the following year’s tuition. The problem is if they are living at home they just aren’t sure how their income may affect their parents and their taxes. To help clear up some of the misconceptions and answer some common questions about student taxes, Toronto Accountant, Sam Seidman has provided some insight.
Question:
Can students work in Ontario during the summer and not have to pay taxes?
Sam:
Employers are required to withhold taxes from employees based on payroll tables. However, if you are a student you can work in Ontario and get all of your taxes paid back provided your income does not exceed as $11,038 in 2013 for Federal and $9,574 for Provincial. Any income tax deducted from your employment will be refunded to you when you file your tax return. Even as a student it is wise to use the services of a Toronto Accountant to make sure you are getting all the tax credits you are eligible for.
You can also earn more money tax free if you are a student and receive a T2202A for tuition, education and textbook amount certificate.
The amount you can earn tax free is increased by your eligible tuition fees plus an amount equal to $465 for each month you are in full time attendance at school or $140 for each month of part time studies for education and textbook amount.
You can transfer up to $5,000 federally ($6,503 for Ontario) of unused tuition to your parents, spouse, common law partner, or grandparent. To transfer the amount you must complete and sign the transfer section of the T2202A form.
Also if you are under 18 years of age you do not have to pay CPP contributions and if you make less than $3,500 per year you will get back and CPP taken off your check when you file your return.
Question:
How many hours can a Ontario student work and be exempt from taxes?
Sam:
If you are a College or University student and working for most of the summer, say a 4 month work term May – August (20 weeks) and earning $800 per week ($20/hour) your total earnings would be $16,000 of which you would most likely have all of your taxes that are withheld, returned as your tuition and education amount would likely cover this. Plus any unused tuition from prior years could be applied to get taxes back.
Question:
Is any kind of student job in Ontario subject to taxes?
Sam:
All jobs in Ontario, including foreign employment income are taxable as you are taxed on your worldwide income, as a resident of Canada, are subject to taxes and must be included on your tax return.
Question:
Should I as an Ontario summer student use a Toronto Accountant services?
Most definitely use an accountant as they will ensure that you claim the tuition even if you have no income as it can be carried forward and used at a later date when you have income.
Question:
Will the income I make from a Ontario student summer job affect my parent’s taxes?
Sam:
Your income will not affect your parents’ taxes unless you are under 18 years of age and your parent is a single parent and claiming you as a eligible dependant. If you are over 18 you can transfer unused tuition to your parent up to $6,503 for Ontario.
Summary:
As you can see there is quite a bit of information pertaining to student taxes that include a lot of potential tax breaks. Often you may think the tax laws are straight forward, but because there are so many of them you really can end up cheating yourself out of tax money that is owed to you. As a Toronto accountant well versed in student taxes I would be happy to assist you with your tax matters.
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