You may not know how to file your taxes, but doing it anyway isn’t just a good idea — it’s the law.
Many students don’t file tax returns because taxes aren’t really a concern; part-time paycheques have little or no taxes taken off. Or they just give them to their dad to file. Those who don’t may regret it in a few years. Student tuition is tax deductible.
That means if you pay $5,000 tuition, you can earn $5,000 more income without paying any income taxes on the increased sum. Combine that with the general exemption — the first $9,039 earned by every Canadian is tax-free — and students can earn more than $14,000 before worrying about taxes (bartenders: you need only get creative about your tips). Full-time students can also claim $400 for each month they’re in school full time.
That brings your limit to more than $16,000. We’re getting up there. If you didn’t make $16,000, file a tax return. Say you made $10,000, the $6,000 of income credit you didn’t use can be deferred for up to five years. It means that when you graduate, if you’re lucky enough to get a job, you can use that credit to escape some taxes for a couple more years. That is worth thousands of dollars to fledgling adults.
First-year students who moved to Toronto may be able to claim moving expenses, but only against revenues from bursaries, scholarships or awards. For more information, contact a chartered accountant. Or your Dad. Just not us.