It’s that time of the year again. You’ve gathered all your tax documents and are ready to prepare the tax returns for you and your family. You think it won’t take much time since the returns will be pretty simple this year. After all, you’ve only sold some stocks in 2014, your spouse made an RRSP contribution, you paid for your son’s university tuition and the family moved to a new house because you got transferred for work. Well, if you’re not using a professional to prepare your tax return, you might miss out on these savings:
Go pro with your tax savings
1. Capital Losses
Most people know that if you incur a loss from selling an investment, you can claim half of the loss against any capital gains from that year. However, what many people don’t know is that if you don’t have any gains in the current year, you can carry these losses forward indefinitely or carry them back to any of the last three years and apply them against capital gains in those years. Just make sure to check if this applies in your case.
If you had capital gains in the past three years, but your income was very low, you will not gain much from applying those losses. In this case, you’re better off to carry your losses forward to a year when your income is higher. If you do end up applying the loss to one of the previous three years, you should apply it to the latest year and make sure to update your records. That way, you won’t try applying another loss to the same gain next year.
2. RRSP Contributions
A lot of us wait until the first 60 days of the year to make our RRSP contributions for the previous year. Others don’t wait, and make their contributions as early as they can in the year. There’s nothing wrong with either method, but what many people don’t do is include these contributions on the correct year’s tax return.
For example, let’s say you made your RRSP contribution on February 1, 2015. The Canada Revenue Agency says you still have to include this contribution on your 2014 tax return. However, whether your intention is to deduct this amount on your 2014 or 2015 tax return is up to you.
Did you relocate to start a new job or go to school? Moving isn’t cheap. Luckily, you can deduct certain costs if you move to a new home that is at least 40 kilometres closer to your new job or school; such as transportation, storage, vehicles expenses, meals and accommodation.
Did you know that you can deduct the cost of professional memberships or dues you’ve paid if they’re related to your employment However, if you’re retired but are still paying for dues to, say, the Professional Association of Engineers, you cannot claim this expense on your tax return. Also, if your company has paid the dues for you, you can only claim them if the amount has been included in your income.
5. Legal Fees
Have you ever had to pay legal fees to appeal a decision by the Canada Revenue Agency about your taxes? Or, have you ever taken a former employer to court to collect wages that were owed to you? You can claim legal expenses like these on your tax return, but make sure you have the proper backup documentation in case the CRA asks for it – there’s a good chance they will. You should have an invoice or statement that clearly shows what service was provided, and the amount you’ve paid.
If you currently have a child in university, you know how expensive post-secondary tuition can be. If you’re the one who paid that tuition, you’re likely able to claim a tax credit for at least some of it on your tax return.
Since your income is higher than your child’s right now, you’ll get a bigger bang for your buck than he or she will. Your child can transfer up to $5,000 of tuition federally to you each year. But what many people don’t know is that this amount can only come from tuition paid in the year. For instance, let’s say that in 2013 you paid $15,000 for your daughter’s tuition. She transferred $5,000 to you on her 2013 tax return, so she has $10,000 left. If she decides to take a year off of school next year, none of that $10,000 can be transferred to you on your 2014 tax return. This could only happen if she had attended school in 2014 and paid additional tuition in 2014.
Want to get in the game?
Most people are familiar with the basic claims one can make on their tax returns, but with a little extra digging, you’d be surprised what options are available to help you maximize your return. Want to know more?