Want your courses to suddenly become more appealing?
Simply look at a tax form and that essay on Chaucer will instantly become an entertaining endeavor that must be undertaken immediately.
While taxes aren’t everyone’s idea of a good time, there are two major reasons that students should consider doing their own taxes sooner rather than later:
1) Students who have worked full-time throughout the summer and/or part-time during the school year often have a tax refund coming their way.
2) Online tax software now makes filing a student tax return a simple process that is almost always free.
The good news for you is that because students generally earn a relatively small amount of money throughout the year, and because the government wants to cut students a break, using tax deductions and tax credits, you may end up getting a nice payment from the government in the form of tax refund. The even better news is, if you don’t procrastinate on filing your taxes, this refund will likely be sent in March or April – right when most students are working with very meagre bank accounts.
What students need to know about filing taxes
For most students, the tax filing process starts when they receive a document from their employer called a T4. The T4 states how much money that you made for the year, and how much was deducted from those earnings. Once you have your T4, you can either use tax software programs to NETFILE your tax return to the Canadian government, or check in with your student office on cheap or free filing options that usually pop up on most campuses in February.
If you’re thinking of using a tax service provider, keep in mind they often charge an upfront fee. In addition, they may offer an immediate refund cheque to students for a portion of the refund. You should be aware, this means when your tax refund comes in, the tax service provider keeps the full amount. For many students, this amount could be substantial.
Tax credits and deductions for Canadian students
A few tax credits and/or deductions which may be available for you and which you might want to read up on before you sit down with your T4 and your T2202A (a document your college or university will provide you with) include:
- An automatic tax credit for your textbooks.
- $400 per-month tax credit for full-time study and $120 for part-time study.
- The tuition tax credit.
- Transit pass tax credit.
- You can deduct medical expenses, if certain conditions are met.
- Child-care expense deductions while you are a full-time student.
Other considerations that you might want to think about before you begin your filing process include:
- Did you receive any bursaries, grants, or scholarships this year? If you did, then you’ll need to print off the accompanying T4A that you got with them.
- RESP income received (the education assistance payments – or EAPs – from the RESP are taxable income reported on a T4A).
- Several provinces have special tax credits available for renters under specific conditions.
Being informed and organized can also help make the task of doing your taxes a little less stressful and overwhelming. Don’t delay. The sooner you tackle your taxes, you sooner your tax refund can make its way to you.