‘Tis the Season. Not that season, tax season! Many of us dread this time of year, getting together receipts from a year ago for that tax thing can be such a pain and the glamour that comes with filing taxes can be unappealing. However, if you’re like me you look forward to hopefully getting that direct deposit that’s on its way.
So why file your taxes?
Filing your taxes can be one of the most rewarding opportunities out there. Even if you have little to no income, filing a tax return will make you eligible for tax credits, deductions and possibly even refunds. Even if you can’t use the perks now they most likely will be beneficial for you in the future.
Reason 1: The Famous RRSP deductible
One of the greatest tax advantages that I know about is the RRSP deductible. The beautiful part of the RRSP is the fact that contributions are tax deductible and this deductible can be carried forward for an indefinite period of time. Being a deductible, it reduces your overall income so you end up paying less taxes. In my personal opinion, I find your student years is the best time to contribute (as expenses are lower) but your adult years or when income is higher, is the best time to use your deductible. Even small deposits to your RRSP on a weekly basis can have great impacts and lower the amount of taxes you pay on your income.
Please keep in mind the following examples look at tax savings assuming max contributions.
Reason 2: Transit
Who knew that riding the bus all day, taking the metro after partying or sleeping on the train after an exam could actually have an impact on your taxes. Public transit is actually a non-refundable tax credit that can directly reduce the amount of taxes you pay. The government gives you a tax credit of 15% of the total value of transit passes (monthly or weekly) as a credit.
Reason 3: Tuition
If anyone brought up the argument of being paid while sitting in class – now you have a small concession. Tuition like transit is a non-refundable tax credit and can be used to lower the taxes you pay. Unlike transit, tuition credits can be used at a later date and can even be transferred to certain relatives. With low-income earners it’s beneficial to push the credits to a later time when income is higher.
Reason 4: Solidarity tax credit
The Solidarity tax credit(STC) is a credit for low income earners over the age of eighteen in Quebec. It is a refundable tax credit provided to all income earners (up to a certain income). Being a refundable tax credit, it can even potentially reduce the taxes you owe to below zero which will automatically trigger a refund.
The STC is offered in Quebec, but other provinces offer it as well.
Reason 5: GST/HST Credit
Like the STC, the GST credit is a tax free quarterly payments specifically designed for low-income earners to offset some sales tax they pay. Applications are done automatically as long as you file a tax return.
Filing your taxes at this age may seem like a tedious task but the rewards you can reap are endless. From the RRSP to the STC, these credits will only show up in your back pocket when you file a return.
Disclaimer: All of the above information is my own personal opinion. I have covered some of the broader credits that are associated with filing your taxes. For additional information and specific details concerning taxes, eligibility criteria for credits and tax deadlines please refer to the CRA website/Revenu Quebec or provincial tax sites.