REFUNDS AND CREDITS FOR STUDENTS – Do I get a tax refund for being a student?

REFUNDS AND CREDITS FOR STUDENTS – Do I get a tax refund for being a student?


Hi everyone and welcome to the first
episode in our February Tax Tips and Update Series. If this is your first time
with us, we make new videos each week on personal finance topics in a way that’s
straightforward and easy to understand. Today we’re going to be looking at some
of the important updates and tips you should know as a student filing taxes in
Canada. If you’ve ever wondered whether or not you need to file, what tax credits
or deductions you’re entitled to, or who can claim a tuition tax credits, then
this video is for you. As a student there are deductions and refundable
credits that you can use to help lower your tax burden and increase your refund.
If you weren’t sure whether or not you should file, I’m going to show you six
reasons why either you should file or you must file a tax return this year.
First up is getting credit for your tuition. One of the most enticing reasons
to file a tax return as a student is to claim your federal tuition credits. If
you attended a post-secondary school in Canada either on a full-time or
part-time basis, you’ll likely receive a tax slip called the T2202
it summarizes the tuition fees that you paid for the year and here’s an example
of what it will look like. Depending on your province you might also be eligible
to claim an additional credit called an Education and Textbook Amount.
Most provinces have eliminated it, but here’s a few areas that still offer the
credit to students. So how does this credit help you though? Well if you
earned income you can use your tuition fees to lower your taxable income which
is either going to reduce your taxes owing or potentially increase your
refund. Even if you’re not working right now you still want to file because your
tuition credits can be banked and carried forward. On top of that, if you
don’t file this year but decide to file in a few years from now, you
actually need to go back and file for every year you missed that you received
a T2202 in order to use those credits. A really
common question is: “what if someone else paid my tuition can you still claim it
or do they?” well that depends… if your tuition was paid by someone other than
families like your employer or the employer of your spouse or parents or
maybe even the government, then even if the school issued you a T2202
you are not allowed to claim it on your tax return. What if you’re an
international student? As an international student, unless you’re
considered a resident for tax purposes you cannot claim your tuition on your
tax return and you also cannot carry for those credits to
be used in future years. Another reason to file your tax return
is student loan interest. Now for many students tuition fees can be the first
and in some cases the start of a long lasting debt as we exit our teenage
years. If you’re lucky and studying in Ontario, for the 2019/2020 tax year
undergraduate tuition fees actually went down by almost 10%. But in every other
province, they either remain unchanged or increased offices highest8.5%. A survey by Statistics Canada found that at the bachelor level over
50% of students in Canada finance their education an out of those, almost half
graduate owing in excess of $20,000. But did you know that the interest on your
loan can be tax deductible? Just be careful though, a common misconception is that
all student loan interest is deductible when in fact that isn’t correct. In order
for your student loan interest to be deductible, then according to CRA you
must have received a loan either through the Canada Student Loans Act, Canada
Student Financial Assistance Act, Apprentice Loan Act, or a similar
provincial law. So what does that even mean? Well for example, if you took a loan
out from National Student Loans like OSAP, then the interest on that loan is
deductible on your tax return. But if you took a student line of credit out or student
loan from your local bank for example, then that isn’t. Interest on those student
lines of credits and loans are not eligible to be deducted on your tax
return. Another great reason to file is the GST credit. If you’re 19 years of age
or older, then you could be eligible to receive the GST credit and you don’t
need to be working in order to qualify. If you’re 18 this year turning 19
next year, you should still file so you can already be set up to receive the
credit automatically once you turn 19. As a single student, you could be eligible
to receive a little over $450. But what if you’re an
international student? Well if you’re an international student and are not
considered a resident for tax purposes, then you would not qualify for this
credit. Another great reason to file is receiving a tax refund. If you work but
earn less than the basic personal amount, you’re likely owed a refund of your taxes paid.
The basic personal amount for 2019 was $12,069 which basically means, if you made that amount
or less, your income is considered tax-free and any taxes collected on your
behalf from your employer will be refunded to you once you file your
income taxes. Here is one example of why you must file, even if you didn’t make
any money: Disposition of Capital Property. If you disposed of capital
property, you must file a tax return even if the sale did not generate income.
Examples of capitil property that you would recognize is real estate, land,
stocks, bonds, mutual funds, anything that could potentially create a capital gain
or loss. The only exception to this would be if you sold investments that were
held within a registered account like a tax-free savings account (TFSA) or an RRSP for
example. Another reason I would encourage you to file your taxes is RRSP contribution
room. If you earned income, even if it was low, filing your return will generate RRSP
contribution room that you can carry forward for future years when your
income is higher. If you’re not familiar with our RRSPs, then I would encourage you
to check out our video that explains the basics of how the account works. Now that
you know whether or not you should file, where and how do you file your tax
return? Well there’s a few options available to you: you can file in person
with a tax professional or another alternative is to file your taxes online
yourself. I’ll include a link to the Canadian government website that has
links to online software to help you easily complete and submit your tax
return online for free. Just keep in mind the deadline to file your taxes this
year is April 30th. This wraps up our first video in our February tax tips and
update series. Stay tuned for our next video where we take a closer look at
taxes with ETFs and mutual funds and we’re also going to discuss some
strategies to consider when building your investment portfolio. Thanks so much
for watching and we’ll see you back here on Thursday.

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