How to Maximize Your Tax Return
It’s tax season again! Instead of stressing about all the paperwork required this time of year, try to focus on the light at the end of the tunnel: your tax return. There are many little-known deductions out there that can help you maximize your return. More money back means more money to put towards paying off something important—like that car loan you’ve been chipping away at over the years.
Whether you received the tax return you deserved last year, or feel you could have boosted it a little more, here are seven tips to help you maximize your tax refund this year.
How to Maximize Your Tax Return in 7 Steps:
- File your tax return on time
- Claim family benefits
- Claim student deductions
- Claim moving expenses
- Claim your GST/HST credit
- Utilize your savings accounts
- File your taxes online for free
File Your Tax Return on Time
For most people in Canada, the deadline to file your 2022 tax returns is April 30, 2023. Keep in mind that the payment is also due by this date, so you’re better off getting them done as soon as possible! The penalty for not paying on time is 5% of your balance owing, plus 1% for each additional month your return is late to a maximum of 12 months—that can add up quickly!
Luckily you have some time to take care of your taxes, so you won’t have to worry about any of these extra fees.
Claim Family Benefits
The Canada Child Benefit (CCB) applies to anyone who has children under 18 years of age and is the primary caregiver for that child (or children). In order to receive this benefit you need to file a tax return, even if you have no income to report. It is a non-taxable benefit that is paid monthly based on your family’s adjusted net income and the number of children you have. The most that families receive for each child under six is about $6,997 annually. The CCB was introduced in 2016 and is a combination of the previous Universal Child Care Benefit, Canada Child Tax Benefit and the National Child Benefit Supplement.
Claim Student Deductions
Are you a post-secondary student or recent graduate? You can claim your tuition and any other education-related costs (such as textbooks) to reduce the amount you owe in taxes. Your school will provide you with paperwork that has the total eligible tuition fees paid as well as the months you were enrolled in either part-time or full-time courses. You can also claim the interest you paid on your student loans!
Moving Expenses
Did you move away from home to attend university or transfer to a new job in a different province? You can claim the expenses associated with the move, like transportation and storage costs, travel expenses, temporary living expenses, the cost of getting out of your lease and more. To qualify for this moving deduction, your new residence needs to be at least 40 kilometres away from your new school or office.
Claim Your GST/HST Credit
All you need to do to claim your GST/HST credit is file your taxes. If you don’t file, you’ll be missing out on a non-taxable quarterly payment from the government that is designed to help offset the cost of the goods and services tax and harmonized sales tax you pay throughout the year. You’re eligible if you’re older than 19, have (or had) a spouse or common-law partner, or are (or were) a parent and live (or lived) with your child.
Utilize Your Savings Accounts
Any contributions you made to your Registered Retirement Savings Plan (RRSP) are eligible for a tax refund. If you forgot to add any money to the pot in 2022, the government’s deadline for RRSP contributions in the 2022 tax year is March 1, 2024. Also, the amount of money you can squirrel away in your Tax-Free Savings Account (TFSA) increases each year—even if you don’t file your taxes or earn any income. If you’re over the age of 18 and a resident of Canada, you can put a maximum of $6,500 into your TFSA in 2023.
Wealthsimple has an RRSP calculator and TFSA calculator you can try.
File Your Taxes Online for Free
If you don’t have an accountant, or would rather spare the expense, you can file your taxes online through the government’s NETFILE service or one of a few certified software products. This can streamline the process and you may get your refund faster.
However you choose to file, just make sure you get it done so you can maximize this year’s tax return!
