Common tax credits and deductions to use to your advantage

Tax season can be overwhelming for some. But here are a few tax credits and tax deductions that might be able to help save you or make you a few dollars!

Key Terms:

Tax credit: reduce the taxes you pay on your taxable income.

Tax deduction: Reduce taxable income

Non-refundable tax credit: can only reduce taxable income down to zero and will not generate a tax refund.

Age amount: Non-refundable tax credit

If you were 65 years or older on December 31, 2021, and your net income is less than $90,313, you will get some sort of tax credit. If you made $38,893 or less, you will get the full tax credit of $7,713 (savings of up to $1,156.95). The more you make, the less of the tax credit you will receive.

Donations: Non-refundable tax credit
Charitable donations are eligible for the tax credit. You will receive a tax credit of 15% on the first $200 and a 29% tax credit on everything over. Donations can be carried forward for five years and must be a qualified donation (i.e., a registered charity).

First time home buyers: Non-refundable tax credit

When buying your first home (or first home in the last 4 years if you have not lived in a home you or your spouse/common-law partner have owned), you can get a tax credit on qualifying homes in Canada. The tax credit is up to $5,000 for eligible individuals; this can result in a reduction of your taxable income of $750.

Medical expenses: Non-refundable tax credit

There are many eligible medical expenses; the common qualifying expenses are prescriptions and dental. The tax credit only applies to the amount that is not covered by health care or repaid by your employer. Medical expenses can be claimed for any 12-month period ending in the tax year and were not claimed in a previous year. For a medical expense to qualify as a non-refundable tax credit, the calculation is less than 3% of your net income and $2,421. Therefore, the tax credit is 15% of the lower amount.

Union dues: Tax deduction

Some jobs require you to be part of a union, and you must pay certain dues. These are a deduction to your taxes if you are not reimbursed for them. 

Student loan interest: Non-refundable tax credit

You can claim the interest paid on your student loan in 2021 or proceeding 5 years.

Childcare deduction: Tax deduction

You can deduct any amounts you pay to somebody for them to look after your child so that you can

-Earn income from employment

-Attend school (post secondary)

-Do research (funded by a grant)

The maximum deduction for children under the age of 7 is $8,000 and children aged 7-16 is $5,000. The maximum amount for children who are eligible for the disability tax credit is $11,000.

Does not include babysitting costs or funds that are paid to caregivers who are related to the child.

Tuition expenses: Non-refundable tax credit

If you are attending a post-secondary education, you must receive a T2202 from your educational institution, (found on your online account). This tax credit can be carried forward until you want to/can use it.

Moving expenses: Tax deduction

If you moved 40km or more for a new job or for fulltime post-secondary education, you qualify for this tax deduction.

Students can deduct eligible moving expenses from income such as scholarships, bursaries.

Workers can deduct eligible moving expenses against money earned at their new job at the new location, that were not reimbursed by your employer.

Eligible moving expenses: 

-transportation and storage costs (packing, hauling, movers)

-travel expenses (vehicle expenses, meals, accommodations)

-temporary living expenses for max 15 days

-cost of canceling your lease

-incidental costs related to the move (changing address on legal docs)

-costs to maintain your old home when vacant (max $5000) (interest, property tax, insurance premiums, utilities)

-cost of selling old home: (advertising, legal fees, real estate commission, mortgage penalty)

-cost of buying new home (legal fees and taxes)

Have questions about a tax credit, tax deduction or non-refundable tax credit, call our office to speak with one of our CPAs.

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