This month, I would like to bring to your attention what you need to consider when preparing your tax return. The deadline for filing your tax return and paying any taxes owing for 2011 is Monday, April 30.
The income you earn during a calendar is reported on tax information slips, also known as T slips. Below is a list of the ones you may receive:
T4, Statement of Renumeration Paid
T4A, Statement of Pension Retirement, Annuity, and Other Income
T4A (OAS), Statement of Old Age Security
T4A (P), Statement of Canada Pension Plan Benefits
T4E, Statement of Employment Insurance (EI) and Other Benefits
T4RIF, Statement of Income from a Registered Retirement Income Fund
T4RSP, Statement of RRSP Income
T5007, Statement of Benefits
RC62, Universal Child Care Benefits Statement
RC210, Working Income Tax Benefit Advance Payments Statement
T3, Statement of Trust Income Allocations and Designations
T5, Statement of Investment Income
Most of these slips are mailed by the end of February excluding T3s, which are mailed by the end of March. If you have mutual funds that are not part of your RRSP, you may want to wait until you receive your T3 slips before filing your return.
If you have made contributions to your RRSP, you will receive a slip for your contributions. Any contributions you have made during January and February of 2012 can be used to reduce your taxable income for 2011.
If you have children who attended a daycare, you should receive a receipt from your childcare provider for the fees you paid in 2011 (some give them on a monthly basis). These can reduce your taxable income. However, they must be claimed by the parent with the lowest net income and there is also a limit to how much can be claimed.
If you have moved 40km or more to begin a new job or run a business, you can claim your moving expenses to reduce your taxable income.
Here are few non-refundable tax credits, and if applicable to you, they can help reduce your taxes payable. These can only be used to reduce your taxes payable to zero, they cannot generate a tax refund.
The expenses you incurred for yourself, your spouse and children under the age of 18 can be claimed. They usually include prescriptions, dental work (teeth cleaning, etc), eye exams, glasses, contacts, orthotics, physiotherapy, massage therapy, chiropractic and naturopathic visits. You can claim expenses for medical services as long as they were provided by members of regulated professions.
You can claim the mileage for medical treatments that are more than 40km away from your home. If you travelled to Cranbrook to see a doctor, you can claim the mileage.
If you travelled to Vancouver, Lethbridge or Calgary to see specialists, and you had to stay overnight, you can claim the related mileage, meals and hotel expenses. To claim overnight expenses, the medical treatment available needs to be more than 80km away from your home.
Don’t forget to record the date of your appointments and name of your doctors and to keep this information with your tax documents.
Unfortunately, these expenses can only be used as a credit if they exceed 3% of your net income. Hold-on to these receipts, you may be able to use them next year. Any unclaimed receipts for a 12-month period ending in the tax year can be used. You could submit your receipts for the period of September 1, 2010 to August 31, 2011 in next year’s tax return for example. Add up your receipts for different time periods and see if it is possible to exceed the 3% of your net income.
Usually, these expenses are claimed on the tax return of the spouse with the lower net income. In some cases, it can be beneficial to move the expenses to the spouse with the higher net income, if the other spouse does not have enough tax payable to offset the medical expenses tax credit.
Children Fitness Expenses
This credit is available for children under the age of 16 at the beginning of the tax year. Expenses up to $500 can be submitted and you can receive a tax credit of up to $75 (15% of $500 or 15% of your expenses). You cannot claim the cost of the equipment purchased. This credit is only for the cost of the programs. To qualify, the programs must be ongoing either a minimum of eight consecutive weeks with a minimum of one session per week or in the case of children’s camps, five consecutive days.
Children’s Arts Tax Credit (CATC)
This credit has the same characteristics as the Children Fitness Expense credit but applies to the registration and membership costs of art, cultural and academic programs, such as learning a language and tutoring.
If you are a student, you should be receiving a tax receipt from the educational institution you attended. Unused credits can be carried forward or transferred to a parent.
You can claim them for the current year plus any unclaimed donations made in any of the previous five years or unused donations can be carried forward up to five years. If you have a low income for a year, keep your receipts and use them for a year when your income is higher. If your combined donations with your spouse exceed $200, they can be claimed on one tax return.
Please visit the CRA website to obtain detailed information. You may also find www.taxtips.ca very helpful.