As if students didn’t have enough to think about they now also have to pay close attention to their tax situation. It used to be that this was something that could be left in their parent’s hands. Back years ago when the parent was predominantly responsible for education costs, it was their role to integrate whatever savings they could when it came tax time in respect to education costs. Things have dramatically changed since then, and most students are responsible for paying for their own education.
This results more often than not in having to find at least part time employment which now opens them up to a tax responsibility. This can be a real burden for the student who really doesn’t understand their tax filing responsibilities, plus it can mean they potentially lose out on some potential tax savings. Every little bit counts when it comes to tax reduction.
First it is important that the student realize that they can claim tuition fees that meet the eligibility requirements.
Next there is the education amount. There are variations here. You may be able to claim as a full time student, but even if you were part time there are still some potential tax savings. As such you may be able to claim the part time incentive if you were eligible for the disability amount, or you have a authenticated mental or physical impairment. This is a big incentive, because it allows you as a full time student to claim $400. for each month you were enrolled in an educational institution. If you were part time then the amount you can claim is $120 for each month of your enrollment.
If you were entitled to claim the education amount then you will also be allowed to claim your textbook amount as $65. For each of the months you qualified for the full time education amount. This is reduced to $20. per month for part time students.
Another big potential savings is being able to claim the interest you are paying on student loans. However, be aware that this is only applicable to loans that were received under the Canada Students loan program, or under the Canada Student Financial Assistance program. It may also include other provincial or territorial lending institutions, but your tax accountant can help you determine this. Pay particular attention to your previous tax returns as a student. If you have not claimed the interest on these you can carry back your claim for the previous five years.
Then there are the costs that are related to attending school. It cost money to travel to your educational institution and the government recognizes this. Most students travel by public transit and these costs mount up. Keep all your transit pass receipts and add these up and then put the total amount on your return.
Moving expenses may be another potential deduction. There is specific criteria that has to be met for this, and it is important that you discuss this with your tax accountant if it something that may be applicable to you.
Finally, if you turning 19 before April 1st, 2015, then you may also now be eligible for the GST/HST credit. You will be contacted by the CRA if you are eligible for this, based on your 2014 tax return.
Some students also incur child care expenses, and these are something that should be considered to see if you are eligible for the child care expense deduction.
As a student you can see why it is not wise to ignore all of the potential tax credits that you may be eligible for, especially if were generating an income to help pay for your education.
