Okay so finally it’s that time of the year again!! While some of you are very excited to get those big refunds from CRA, others are probably dreading at the thought of paying more taxes!!
It pays to plan for tax season ahead of time because who wants to pay CRA anyways! and it’s not too late. Here are some tips and tricks to help you save the most on your taxes!! Make note of these and discuss it with your accountant when you file your taxes.
1. Contribute to that RRSP account now!!
RRSP is our own little tax haven as it offers a tax deduction, the amount you contribute to RRSP lowers your taxable income. So contribute as much as you can before March 1st, 2018 and watch your tax refund getting bigger and BIGGER!!
2. 65 or older? This tax credit is just for you.
Canadians aged 65 or older with an annual income of less than $35,927 can claim the Age Tax Credit. That credit could potentially save you up to $1,068 in federal tax for 2017. The credit is reduced for seniors with incomes over $35,927, and disappears when income reaches $83,427. And the best part, any unused age amount can be transferred to a spouse.
3. Received pension income in 2017? You may be able to split it with your spouse.
If you received eligible pension income in 2017 (other than the Canada Pension Plan), you may be able to split up to half of that income with your spouse. This income splitting will save you tax, particularly if you’re both able to claim the pension credit.
4. Caring for family a member?
Did you provide in-home care to your senior parents, grandparents, or physically/mentally infirm family members in 2017? You may be entitled to one the new Canada Caregiver Credit.
5. Sold your home last year? Don’t forget to report the sale to CRA!
If you have sold your principal residence in 2017, don’t forget to report it in your income tax return. If you fail to do so, the penalties are steep ($100 a month, up to $8,000).
6. Did your children make any income in 2017? Start filing tax returns as early as you can.
If your children earned income in 2017, filing a tax return will get them a head start in their RRSP and TFSA contribution room. And they’ll be able to use this when they start working full-time.
If they are turning 19 in 2018, they may even start receiving GST/HST credit, meaning up to $276 in their pockets!
7. Claim medical expenses incurred in 2017.
You can claim any medical expenses that exceed 3% of your income or $2,237 (whichever is less). If you and your family member incurred any medical expenses in 2017, claim them on the tax return of the lower-income spouse.
8. Have lots of unused tax credits? Transfer them to your spouse to save more
You can transfer the following unused credits to your spouse:
- Age Tax credit
- Pension income
- Disability credit
- Family Caregiver credit
- Tuition credit
- Education and Textbook credits
Note: Students can transfer up to $5,000 of their tuition and education amounts to a parent or grandparent.
Important DEADLINES : Most income tax and benefits returns for 2017 are due on April 30, 2018. If you (or your spouse) are self employed, you have until June 15, 2018 to gather your documents and file your income tax return.
Make sure you file your taxes on time to avoid interruptions to your Canada Child benefits or GST/HST credits!