By Barry Hertz
Arts & Entertainment Editor
You are losing money without even knowing it — and you’re not alone.
Judy Jang is one of the many Ryerson students who have never filed taxes and aren’t planning on starting now. “I’ve never worked or had a part-time job, so there’s really no reason,” says Jang, 18, a first-year social work student. “I’m not going to get anything back.” What Jang and other students don’t know is that — even without a part-time job — they could be losing money, at least more than $200 in GST rebates, by not filing a return.
Instead of letting your cash fall into the hands of the government, the Eyeopener has come up with a few simple tips that will help you keep your money now — and in years to come.
Start Early, Save More.
First things first: You need to wipe that ridiculous look of faux-terror off your face every time you hear the words “income tax.” It’s not cute. “Filing taxes is an important part of the lifelong learning process,” says Peter Delis of Revenue Canada. “People will always have questions about what they have to file, but you need to start sometime.” While income taxes aren’t due until April 30, you should already be gathering receipts, anything that can be found deductible, and those “T-something” forms that come every January.
But your first big step is to get over the stigma attached to the filing process. “Students are either frightened or it just never occurs to us to do anything,” says Sarah Librach, 19, a second-year early childhood education student.
“But I realize it’s my money and I need to be concerned.”
No income = income. Weird.
The biggest misconception among students, Delis says, is that they don’t think they need to file a return unless they have a part-time job. But even if you don’t spend 20 hours a week folding clothes, you are still eligible to receive, at least, the GST rebates. “While it’s true that anyone earning less than the personal amount ($8,648 for the 2005 fiscal year) doesn’t need to file a return, they really still should,” says Harry Wallach, a certified general accountant who handles student taxes every year.
“Every individual 18 years and older is entitled to a GST rebate of $57 every three months. But to get it, you have to file a return.” University tuition is also deductible. This means if you pay $5,000 a year, you can earn that much more income without paying tax on your yearly total. It’s essentially tax-free money, with your tuition adding money to what you can earn to your allowance of $8,648. Before you know it, you may have $14,000 tax-free dollars to declare.
Another good reason for staying in school, Wallach says, is that full-time students can claim $400 for each month they’re in class on top of their tuition and tax-free income. The best part is that if you don’t use all your exemptions — if you don’t earn as much as your limit allows — you can defer the credit for up to five years. It means that when you get a job and become an adult, your taxes will be lower for the first couple years.
“I have clients with children who are medical students and they are carrying in excess of $80,000 to future years,” Wallach says. That credit translates into thousands of dollars saved in the next few years.
Forms and Formalities.
Filing a return seems easy enough once you know what’s in it for you, but how do you actually do the damned thing? The best place to start is Revenue Canada’s website, where all the forms can be downloaded, including T4s (employment income, which your employer sends you in the mail), T5s (investment income, for you Trump types) and T1s, which you need to fill out to file in Ontario. Another common form is the T2202 (tuition form), which is available through the financial aid office or through RAMSS.
Once you get your T4s in the mail — one from every organization from which you’re claiming income — just group them with your T2202 and T1 to file a return. You could drop it off yourself — the local office is at 1 Front St. W. — or are you concerned you screwed up? Take it to an accountant. Fear not; it’s not very expensive or complicated. It’s convenient, and free. That’s right. It’s free. Don’t panic! Though H&R Block seems like a healthy option, you can actually avoid spending money to, er, save money.
“We have free filing for anyone with an income of $20,000 or less, whether you’re a student, senior or just confused about the process,” says Karin Lundberg of the Community Volunteer Income Tax Program, a program sponsored by Revenue Canada. Beginning yesterday, dozens of free centres across Toronto began taking appointments to file free income tax forms. The location nearest Ryerson is at the 519 Church St.
The Institute of Chartered Accountants of Ontario (ICAO) also offers free tax clinics for those with a total income, for persons with dependents, below $22,500. Individuals who don’t have dependents are cut-off at $15,000. “The clinics are excellent ways for accountants to help students and the community,” says the ICAO’s Perry Jensen. “But because of space, it’s a good idea to get an early appointment.”
If you find that leaving campus is a chore, there’s always the free tax clinic set up by the Ryerson Students’ Union, which starts in mid-March. And for the even lazier, the Canadian Federation of Students (CFS) and tax software makers Ufile have combined efforts to make the software free to university students. “It provides students with ways to better themselves,” says Dave Hare, the national treasurer for the CFS.
“If you’re not comfortable submitting taxes online, you can just complete the forms online, print it and then mail it out.” The program will be available on Ufile’s website as of today. “Before the option to complete the form, there’s a verification to see if you’re a university student, and the fee is then deducted,” Hare says.
After learning about her options, Jang sighs while thinking how close she got to being screwed. “It was something my friends never talked about,” Jang says. “But now, I’m going to get a move on filing.”