With this year’s income tax deadline quickly approaching (it’s April 30 for most people, and June 15 for those who are self-employed), Golden Girl Finance worked with Audrey McNab, a client service leader and master tax professional at H&R Block, to not only file their taxes, but also dig up three things people commonly miss when submitting their claims.
The result? A list of key things even the most experienced financiers overlook that could save them big bucks.
Note the below and you may score a bigger tax return for 2015.
Want a few more must-know tax tips? Click over to Slice.ca.
1. The first 60
Recent changes to rules around RRSP deductions means you now have from March 1 in “year one” to the February 28 in “year two” to make contributions you intend to claim in your “year one” tax return.
“RRSP receipts for the first 60 days of the year are being missed and many clients come in with receipts only for 2015,” says McNab. “It’s causing a lot of confusion.”
But there’s reason for it.
“It gives taxpayers the option of putting this deduction in after they’ve found out just how much they made in that year,” adds McNab. “You could reduce your tax owed substantially simply by putting in that extra $1,000 to bump you back down to the lower tax bracket.”
2. Pay it forward — and push it forward
Opting to claim your charitable donations in the same year you make them might not be the most generous thing you can do for your own wallet.
Charitable donations can be stowed away for as many as five years and used in the sixth year along with any charitable donations made during that season. Amounts up to $200 are multiplied at 15 per cent to calculate the total tax credit while any dollar over and above $200 is multiplied at 29 per cent. McNab recommends saving up your charitable donations for as long as it’s beneficial in order to maximize their value.
“Claiming these each year might save a couple of dollars, but rarely are they enough to actually make a significant impact,” warns McNab.
READ MORE: How a savings account eats up your money
3. Give credit where it’s due
According to McNab, “If you’re owed money, no one’s going to tell you about it.” (Surprising — we know.)
Here are a few credits and deductions you may be missing:
• Rent: In Manitoba, you could earn $700 toward your refund if you paid $5,000 or more in rent during the tax year.
• Child care expenses: If you’re in a higher tax bracket, this deduction could help reduce both your tax rate and your total tax payable. In most cases, this deduction must be claimed by the lower-income spouse. There are special circumstances under which the higher-income earner can claim these expenses, giving you and your household a bigger bang for your buck (and yes — the school lunch program counts). Your tax professional can help you identify the best way to benefit from this deduction.
• Children’s arts and fitness programs: These non-refundable credits are ones you’ll want to exercise. These can be used to reduce your tax payable; and the children’s fitness tax credit is also now federally refundable (at least, for now).
• Disability expenses: You may be able to claim certain disability tax credits and deductions.
• Tuition expenses: Depending on the province in which you reside, tuition tax credit rules vary.
For more tax tips, click over to Slice.ca!