Saving on Tax Tips

7 Tax Tips That Could Save You Thousands

Take a look at this tax tips

There are a lot of tax credits that benefit different kinds of people. If you fit in one or more of the following cases, you’ll be able to save some money.

Tax Tips

1. 65 or older? This tax credit is just for you.

Canadians aged 65 or older with an annual income of less than $35,927 can claim the Age Tax Credit. That credit could potentially save you up to $1,068 in federal tax for 2016. The credit is reduced for seniors with incomes over $35,927, and disappears when income reaches $83,427. And the best part, any unused age amount can be transferred to a spouse.

Tax Tips

2. Received pension income in 2016? You may be able to split it with your spouse.

If you received eligible pension income in 2016 (other than the Canada Pension Plan), you may be able to split up to half of that income with your spouse. This income splitting will save you tax, particularly if you’re both able to claim the pension credit.

Tax Tips

3. Caring for family a member? You may be eligible for several credits

Did you provide in-home care to your senior parents, grandparents, or physically/mentally infirm family members in 2016? You may be entitled to one or more of the following credits:

  • The Caregiver Credit
  • The Infirm Dependant Credit
  • The Family Caregiver Credit

Note: These three credits will be replaced by the new Canada Caregiver Credit in 2017.

Tax Tips

4. Sold your home last year? Don’t forget to report the sale to CRA!

If you have sold your principal residence in 2016, don’t forget to report it in your income tax return. If you fail to do so, the penalties are steep ($100 a month, up to $8,000).

Tax Tips

5. Did your children make any income in 2016? Start filing tax returns as early as you can.

If your children earned income in 2016, filing a tax return will get them a head start in their RRSP contribution room. And they’ll be able to use this when they start working full-time.

If they are turning 19 in 2017, they may even start receiving GST/HST credit, meaning up to $276 in their pockets!

Tax Tips

6. Claim medical expenses incurred in 2016.

You can claim any medical expenses that exceed 3% of your income or $2,237 (whichever is less). If you and your family member incurred any medical expenses in 2016, claim them on the tax return of the lower-income spouse.

Tax Tips

7. Have lots of unused tax credits? Transfer them to your spouse to save more

You can transfer the following unused credits to your spouse:

  • Age Tax credit
  • Pension income
  • Disability credit
  • Family Caregiver credit
  • Tuition credit
  • Education and Textbook credits

Note: Students can transfer up to $5,000 of their tuition and education amounts to a parent or grandparent.

Last Words…

Most income tax and benefits returns for 2016 are due on April 30, 2017. If you (or your spouse) are self employed, you have until June 15, 2017 to gather your documents and file your income tax return.

Make sure you file your taxes on time to avoid interruptions to your Canada Child benefits or GST/HST credits!