Author Archives: annakemp

“In this world, nothing certain but death and taxes.” – Benjamin Franklin

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Tuition credits

If you are in school, you get a tax break in the form of tuition credits. And if you can’t use these credits, you can transfer them to your spouse, your parents or your grandparents.

Step 1: Get a Form T2202 from your college or university.

Step 2: The information from this form must be entered into a schedule 11 on your tax return in order to claim the credits. You will be able to claim both a tuition amount, and a monthly allowance for books, as detailed on the form. (Contact me if you have any questions.)

Step 3: If you can not use the credit (because your income is too low) you can either keep the credit for future years, or transfer it to a spouse, or transfer it to a parent or grandparent up to $5,000. To transfer the credit you must sign the back of your form T2202.

NB. The student is the one who fills out the schedule 11. If you are the person receiving the transfer you do not submit a schedule 11. The only supporting documentation you need is the signed T2202, and make sure you keep this documentation in case CRA requests it.

Read the CRA page on the subject of transferring tuition and education credits.

 

Claiming your child as a dependent

“Kids. Exactly when do they stop being your dependent?” – mother of a 20 year old still living at home

In this economy, many young people continue to live at home while in university, or receive financial assistance from their parents past age 18. Sadly, for tax purposes, after the end of the year they turn 18, they can no longer be claimed as a dependent on your taxes unless they are disabled or infirm.

In short:

Turning 18- In the year your child turns 18, (unless they are disabled or infirm ) they are a dependent until Dec. 31 of that year. On Jan. 1, as far as CRA is concerned, they are on their own.

Disabled or infirm-If your child is older than 18 and needs ongoing support for medical reasons, you will need to provide a letter from a doctor in order to claim your child as a dependent.

Young earners (under 18)- A single parent who claims the amount for an eligible dependent must deduct the child’s income from the amount that can be claimed.

Attending University – Over 18 years, you can not claim your child as a dependent, but you can claim up to $5000 in tuition credits. See my post on tuition credits for more information.

 

Do I really have to keep all these receipts for 7 years?

“I am trying to cut down on stored paper (and ideally to have none) but would like to have all my business receipts on file for next tax season. I’m wondering – is it acceptable to store the receipts in digital format? For example could I just take a photo of each receipt? And what about the tax return papers that are supposed to be stored for 7 years? Are digital photos good enough in the case of an audit or must I keep all this paper clutter?” – Jesse, Musician

Unfortunately, no, digital files are not currently accepted by the Canada Revenue Agency in the case of audit. The chap I spoke to at CRA insisted that you must keep all your receipts. When you are self employed, it can turn into a pile of paperwork, but a small accordion file for each year is often a good solution. There are bookkeeping apps that photograph your receipts, which you may find helpful when out and about, but you will want to keep the paper originals as a back-up.

And regarding what to save for tax returns: basically your Notice of Assessment, your return and any supporting documents for this year and the preceeding 6 years.

Self-employed people have so much to keep track of. Myself, I run a bookkeeping and tax-filing business, freelance write and somehow manage to get my son to school each day, mostly remember library days and generally keep my house in a state of only semi-disarray. My life is an organizational feat! And while what I do works well enough, some days, my well-worn day-planner looks like the notebook of someone in the throws of madness. I keep wondering whether adopting a digital method of managing my time might ultimately make my life run a tiny bit more smoothly. Would going digital going to actually make my life easier – or will it simply mean more time spent staring at a screen, yet another application demanding my attention, something I feel overwhelmed for not keeping up to date?

I put up a Facebook post asking people what they use and the first few answers are The Secret Weapon, WunderList and Google Calendars.

 

my dayplanner

Getting ready for tax filing

Yes, it’s another list. This time it is a checklist to help you get all your paperwork ready for your tax preparer.

tax and wine

Here is a basic list of the information to put together:

a) personal details: name, address, sin, date of birth and marital status (name and sin of partner if common-law or married)

b) information about dependents – birth dates, full names, plus any eligible expenses including childcare, arts and sports expenses (contact me if you need more information about what is eligible)

c) all income information including:
T4, Statement of Remuneration Paid
T4A, Statement of Pension, Retirement, Annuity, and Other Income
T4A(OAS), Statement of Old Age Security
T4A(P), Statement of Canada Pension Plan Benefits
T4E, Statement of Employment Insurance and Other Benefits
T4RSP, Statement of RRSP Income
T5007, Statement of Benefits
T5, Statement of Investment Income
RC62, Universal Child Care Benefit statement
RC210, Working Income Tax Benefit Advance Payments Statement

d) any student loan payments (you should receive a statement which details how much interest and principal were paid off over the year.)

e) Your Notice of Assessment from your most recent tax return

f) Details about any RRSP contributions made

g) Details about any charitable donations made or moving expenses (over 40 km for work or study)

h) Self employed people – see my previous post

i) If you have rental income – hold tight, as I am working on a post about that. In the meantime, contact me for more detail if you need it.