As a young person with an array of expenses behind you and even more looming on the horizon, it's important to keep one thing in mind: never leave money on the table.
Tax season is the perfect opportunity to seek out savings by learning more about the tax credits available to you. Particularly for those who currently or recently paid for tuition, understanding your tax-credit entitlement can mean thousands of dollars in savings to help you pay down your student debt.
"Millennials need to start thinking about filing their taxes as a self-investment," says Lisa Gittens, senior tax professional at H&R Block. Students carrying debt, for instance, can use their refunds to pay down student loans or high-interest credit-card debt.
Research the credits available to you, speak to an expert, and start investing in yourself. Here are a few examples of credits and expenses you can write off to boost your tax refund.
Education tuition
Students should keep track of all the tax information they receive from the Canada Revenue Agency. The T2202A is a form that is of particular importance. It tracks tuition fees paid for the year, and will help you and your tax specialist determine your eligibility for education credits.
The education credit is available to students over the age of 16 who are enrolled in a post-secondary program at an accredited educational institution. If the student does not have income during their years of study, the unused credit carries forward to future years or can be used by a spouse, common-law partner, parent or grandparent. The transfer amount is limited to $5,000 of the current year's federal tuition amount. One thing to keep in mind is that once you have carried forward a tuition amount, you can no longer transfer it.
Moving expenses
One common trend among millennials, says Gittens, is that more and more of them are moving across the country for work. What some might not know, however, is that any move of 40 kilometres or more for the purpose of work or education can be claimed for a tax refund.
Common expenses you can deduct for line 219 of your return include:
- Transportation and storage costs;
- Vehicle expenses and accommodation required to move you and your family to the new home;
- The cost of cancelling the lease on your previous home;
- Costs to maintain your previous home while you try to sell it.
When claiming moving expenses, it is important to keep track of all your receipts to ensure accuracy and back up your claim.
Entrepreneurial expenses
We're now in what many are calling a "gig economy," which means that many millennials are either opting to go the entrepreneurial route as a full time option, or using it as a way to supplement their full-time income. In either case, there are tax breaks available to those who work out of their home.
If you are self-employed, be sure to keep track of all your expenses and claim the ones that are crucial to your business, including a percentage of the square footage of your home used for business, mileage from driving for business, internet bills and cell-phone usage.
While general tax returns must be filed by April 30, those who run a business have until June 15 to file. If you have a balance owing for 2017, however, you must pay it by April 30.
Other ways to boost your tax refund
- The government has recently eliminated tax credits on public transit, but you can still claim your public transit passes up until June 2017.
- If you took on a professional designation to boost your employability, you can claim the professional fees that often come with the designation during tax time.
- Once you're out in the working world, you might eventually be able to budget for charitable donations. Keep in mind that these are tax deductible, and can effectively reduce your taxes for the year. Save all your charitable receipts.
File your taxes
Regardless of the refund -- or lack of refund -- you expect to receive, Gittens recommends always filing your taxes.
"When I file my tax, I can claim the credits I am entitled to," she says. "I'm creating a record for myself with Canada Revenue Agency when I show them my income and that I'm filing every year."
Gitten recommends that millennials educate themselves on tax rules, talk to an expert and make the claims for which they are entitled. She also notes that one important factor that often goes forgotten is that every tax return generates a notice of assessment, which is often required as a legal document for everything from a car loan to a mortgage application.
Taxes can be daunting, but learning about ways to save money through them can mean thousands of extra dollars that you can put towards what matters most -- yourself and your future.
