Canadians are feeling the pinch of the rising costs of living, with recent consumer price index data revealing one quarter of Canadians are cutting back on essentials like food, utilities, shelter and clothes to make ends meet. While we can’t control potential price increases for our weekly grocery shop, at the gas pumps, or in interest rates – we can ensure we maximize our tax refund this season.
“Think of it as the push-pull tax return effect. The name of the game is finding credits that help you lower your taxable income and then finding benefits you can claim to make sure you’re also getting the biggest possible return,” says Yannick Lemay, tax expert at H&R Block. “There are a few things we can all do to ensure we take advantage of available programs.”
Following these five tips could get you a bigger refund:
- Check the tax credits you’re entitled to. There are over 400 credits and deductions available for anyone. Claim childcare benefits, medical expenses not covered by insurance, moving expenses for school or work, union dues and employment expenses, including the Canada Workers Benefit. Additionally, most provinces have their own benefits, such as the Climate Action Incentive Payment that was made available to most provinces this year. It can mean up to $1,000 in quarterly payments for some families.
- Maximize your registered savings account contribution. Though it doesn’t necessarily equal a bigger refund, if you invest in a registered savings account, such as an RRSP, you not only end up with a generous nest egg, but you also lower your taxable income, as contributions to these accounts are not taxed.
- Donate to charity. When you donate to a registered charity, you can claim that donation on your taxes by submitting the receipt. You’ll get a percentage of your donation returned to you – a win-win.
- Claim interest on student loans. If you’ve got student loans, the interest payments are tax deductible – nice to have over years of payments
- Coordinate with your spouse to transfer credits. When one spouse earns less annually than the other, some of the higher-earning spouses’ credits can be transferred to the lower-earner.
Tax benefits and credits are constantly shifting, and so is each person’s unique life, employment and financial situation. Lemay says that when in doubt, seek advice from a tax expert who’s trained to help maximize your return. Find more information at hrblock.ca.