Uncle Sam Tax - Increase your refund

Hate Taxes but Love Refunds?

Posted on Posted in Personal Finance, Taxes

It seems like yesterday I was counting receipts and organizing my slips for last year’s tax return. I really wish the government would hurry up and automate this process for us, it’s such a pain every year.

The only light at the end of the “tax” tunnel is the potential for a refund. Because let’s face it, who doesn’t love a nice cheque back from the government.

That’s why I put a few tips together to add a few extra hundred dollars to your pocket this tax season. Not all of these will apply, but even if one works in your situation, I promise it’s worth the two minute read.

In no particular order:

Signup for a CRA My Account Login: The CRA provides online access similar to your online banking to review an array of valuable information. You can check previous tax information, the status of your submitted return, or even when your refund will be deposited into your bank.

You can sign on using your online banking information (Note: the CRA will verify your access by asking you a specific number from your 2015 Tax Return).

Or, you can register and request a CRA Security Code to be mailed to you to verify your account.

Unused Credits: Once you have access to your CRA My Account login, you can check to see if you have unused Tuition Credits from previous years. These can be applied to your 2016 tax return and help you get more money back.

You also can check your tuition credit claim history to ensure you didn’t miss claiming a semester in the past.

If that’s the case, you can use the CRA Change My Return function to adjust previous years and add information you may have missed.

Transit Pass Credit:  If you pay for a metro pass, short term pass or use a presto card, you may be eligible for a credit. There is specific criteria you must meet in terms of trips per period – you can check the rules here.

Medical Expenses: You are eligible to claim a variety of medical expenses on your tax return. These can add up quickly depending on your situation. One caveat is that medical expenses up to 3% of your income (or $2,237) do not count. So if you are earning a high income, don’t be surprised if your medical expenses don’t add any benefit.

Interest on Student Loans: The fact that the government makes money off the funds they loan us for post-secondary school is for another post, but at least they allow us to claim the interest we paid to reduce our taxes. Sign-in to the National Loans website and download your 2016 receipt to claim this.

Moving expenses: Have you moved 40 kilometers closer to your employer or post-secondary school? If so, the expenses you incurred can be claimed. There is a list of expenses that qualify.

Use Free Tax Software: Do you still buy the CD every year to do your own return? H&R Block now offers free online software to file your taxes instantly. If you have a straight forward return and are comfortable filing it yourself, definitely give it a shot.

Professional advice is still invaluable, especially if you have a complicated situation or want nothing to do with filing your own taxes. Find a local tax professional that focuses on individuals in your situation to work with.

Finally, what to do with your refund?

After you use all of the above tips to increase your return, the question then shifts to, what are you going to do with this extra money? While it may be tempting to spend it on Amazon the day it’s deposited into your bank, try to use it to get ahead with your finances. I would recommend using it for (in this order):

  • Pay off high-interest debt and/or create an emergency fund
  • Contribute to a TFSA and start investing towards Financial Independence
  • Cross something off your bucket list

If you have any specific questions about the above points, I’d be happy to help. Just send me an email – brandon@alifeofwealth.com

 

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This post is not to be taken as professional tax advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax advice. You should consult the CRA website or your own tax advisors before claiming any credit or deduction.