Maximizing your tax credits and tax deductions for education
Unreimbursed tuition, education, and text book costs for post secondary education or those that develop/ improve your skills can qualify for a federal tax credit. By using this tax credit, it will reduce the amount of taxes that you owe the government
Eligible Tuition/Education Amounts
- fees paid or reimbursed by your employer;
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fees paid by Federal, provincial, or territorial for job training program;
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students' association fees;
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medical expenses;
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transportation and parking;
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meals and lodging;
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goods of lasting value that you will keep, such as a computer, microscope, uniform, or an academic gown;
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initiation or entrance fees to a professional organization; or
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cost of books (other than books that are included in the total fees for a correspondence course).
How much of the Education amount can qualify as a Credit
If you are a full time student, you can claim $400 per month. If you are a part time student, you can claim $120 per month.
Textbook tax credit amount
You can also deduct the costs of the textbooks that are used for your courses. Note, you can only claim the textbook credit, if you are claiming the education/tuition fees.
- If you are going to school full time, the credit that you qualify is $65 for each month that you attend school (same amount of months as for tuition/education credit).
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If you are going to school part time, the credit you qualify for is $20 for each month that you attend school (same amount of months as for tuition/education credit).
Transferring and carrying forward tuition, education, and textbook credit amounts
In many cases, the student does not have the cash flow to pay for their own education. Consequently, usually it is someone else paying for it (usually a parent or some other family member). For tax purposes, it is the student (not the person who paid the fees), that gets to first claim the credit. The student must claim the tuition, education, and textbook amounts on his tax return. He then can apply the credit to his tax return.
Any remaining tax credit can be transferred to either a spouse, parent, or grandparent. The maximum amount that can be transferred is $5000. If you are going to transfer a tuition, education, or textbook tax credit, only transfer the amount that will reduce his/her federal income tax to zero. By doing this, you can maximize the benefit of the credit and can carry the forward the unused amount to a future year.
Summary
There are costs associated with getting a higher education. In order to lesson this burden, there is a tax credit to help with the tuition, education and textbook costs. Also, by using the tuition, education, and textbook credit, it is a great way to reduce the amount of tax liability that is owed to the government. The ideal situation is to be able to have a zero liability and to then transfer the remaining amount to a spouse, parent, or grandparent.
The tax credits etc. mentioned above area small part of the multitude of tax deductions and tax credits that are available to you. Making sure you maximize the tax deductions available to you is an important part of reducing your income tax to minimum possible and can be quite complex. The tax accountants at Tax Doctors Canada specializes maximizing your tax deductions in order to save to you the most money on your income tax returns. They see the big picture and work for your best interests. You can count on Tax Doctors Canada.
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