With all hustle of back-to-school, taxes are the last thing students want to think about. The Institute of Chartered Accountants of Ontario has released their annual tax tips for students. The tips are essentially a list of options, benefits, and credits available for students, which can turn into tax deductions or even some extra money.
“Many people, notably students, believe that if you don’t owe any taxes, you don’t have to file them,” says Jennifer Horner, a senior manager specializaing in national taxes at BDO Canada. “This is true, but you would be missing out on future benefits as well as immediate benefits in not doing so.”
If students have a scholarship, or living, moving, or transit expenses, they are eligible to file a tax return. If a student’s income is lower than $10,382, there is the added bonus that they won’t actually have to pay income taxes.
Post-secondary students are eligible for a non-refundable tax credit to assist with textbook costs. “The textbook tax credit is calculated based on $65 for each month a student qualifies for the full-time education tax credit, and $20 for each month the student qualifies for the part-time education tax credit,” said a media release from the Ontario Chartered Accountants.
Students can also receive tax credits for moving expenses and transit expenses. Even if students are not expecting a tax refund, filing a tax return could prove beneficial in the future. “Students with earned income should always file a tax return because it will generate Registered Retirement Savings Plan contribution room,” said a media release from the Ontario Chartered Accountants.
If a student does not claim their tax credits, they can transfer the cost of tuition fees to any supporting parent, grandparent, or spouse, who can then get tax deductions. The “supporting adult” will have a significant yearly income, and unlike the student they are supporting, is paying taxes and can immediately benefit from the tax deduction.
Horner suggests that many students are hesitant to complete what they believe is a confusing tax claim process.
“From a philosophical point of view…the government wants you to be able to complete your own tax return. It’s not supposed to be so complicated that you can’t figure it out,” said Horner.
