As the kids head back to college or university
in a few days, why not share some tips with them so they can be sure they are
taking full advantage of the tax system to maximize the amount of cash in their
jeans.
Here are five top tax tips for students:
1 Maximize your non-refundable tax credits.
If they earned income during the year, perhaps from a part-time or summer job, then the various non-refundable credits available to them as a student should come in handy to reduce their federal, or in some cases, provincial taxes payable.
The most common credits for students include: tuition, education, and textbook credits, a credit for the cost of monthly public transit passes, a credit for interest paid on certain student loans and the relatively new Canada employment amount.
2 Their scholarship is tax-free!
The tax rules changed back in 2006 to exempt the full amount of any scholarships, fellowships, bursaries, study grants and artists' project grants received by students from tax; provided the program they are enrolled in entitles them to the education credit.
3 Report only the EAP portion of RESP withdrawals.
Only the educational assistance payments (EAPs) from their Registered Education Savings Plans are taxable. EAPs consist of the income, growth, or Canada Education Savings Grants (CESGs) paid out to them from their RESP. Any contributions refunded to them are tax-free.
4 Claim moving expenses.
If your son or daughter moved back home from school during the summer months to earn employment income, they can deduct their moving costs against their summer employment earnings provided their move was more than 40 kilometres.
5 Consider a TFSA for extra cash.
Have they saved some extra cash from working during those summer months? Why not tell them to sock up to $20,000 into a new Tax Free Savings Account (TFSA). The money grows tax- free and they can access their funds whenever they want, for any reason. Plus, any amounts they do withdraw can be re-contributed, beginning the following year.
We live in Canada, we pay tax. Helping our kids keep more of their hard earned income will hopefully educate them on the importance of tax planning, a great skill to have.
Enjoy the last long weekend of the summer,Here are five top tax tips for students:
1 Maximize your non-refundable tax credits.
If they earned income during the year, perhaps from a part-time or summer job, then the various non-refundable credits available to them as a student should come in handy to reduce their federal, or in some cases, provincial taxes payable.
The most common credits for students include: tuition, education, and textbook credits, a credit for the cost of monthly public transit passes, a credit for interest paid on certain student loans and the relatively new Canada employment amount.
2 Their scholarship is tax-free!
The tax rules changed back in 2006 to exempt the full amount of any scholarships, fellowships, bursaries, study grants and artists' project grants received by students from tax; provided the program they are enrolled in entitles them to the education credit.
3 Report only the EAP portion of RESP withdrawals.
Only the educational assistance payments (EAPs) from their Registered Education Savings Plans are taxable. EAPs consist of the income, growth, or Canada Education Savings Grants (CESGs) paid out to them from their RESP. Any contributions refunded to them are tax-free.
4 Claim moving expenses.
If your son or daughter moved back home from school during the summer months to earn employment income, they can deduct their moving costs against their summer employment earnings provided their move was more than 40 kilometres.
5 Consider a TFSA for extra cash.
Have they saved some extra cash from working during those summer months? Why not tell them to sock up to $20,000 into a new Tax Free Savings Account (TFSA). The money grows tax- free and they can access their funds whenever they want, for any reason. Plus, any amounts they do withdraw can be re-contributed, beginning the following year.
We live in Canada, we pay tax. Helping our kids keep more of their hard earned income will hopefully educate them on the importance of tax planning, a great skill to have.
Tracey
Source:
Original article written my Jamie Golombek, welcometojamiegolombek.com
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