Did you know that being a student makes you eligible for certain tax breaks?
Did you know that being a student makes you eligible for certain tax breaks? By understanding the deductions you’re entitled to, you can ease a lot of the financial strain that comes with attending a post-secondary institution. To save money this tax season, pay attention to these four tax breaks for students.
1. Tuition tax credit
Generally, Canadians enrolled in post-secondary level courses at an accredited institution in Canada are eligible for a federal tuition credit. And in many circumstances, it’s the same for students attending schools outside the country. Since the 2017 tax year, the tuition credit also applies to occupational skills courses offered at post-secondary institutions.
The federal tuition credit is equal to 15% of the amount of the tuition paid. It’s a non-refundable credit, meaning that it can only be used to reduce your tax bill but can’t generate a refund. If you’re a low-income student, you may be able to eliminate your tax bill without using up your entire tax credit. In this case, you can carry the credit forward to future years. Or, alternatively, you can transfer the credit to a spouse or partner or a parent or grandparent for their own tax return.
2. Deductions on student loans
Your student loan interest earns you a non-refundable tax credit, provided it was a loan received under the Canada Student Loans Act, Canada Student Financial Assistance Act, Apprentice Loans Act or similar provincial or territorial government laws. As with the tuition tax credit, you have the option of carrying this credit forward to future years. The credit isn’t, however, transferable to another person.
3. Moving expense deduction
If you moved more than 40 kilometres for your education, you may be eligible for a moving expense deduction. You will be able to confirm this by looking at the tax slip you received from your educational institution. If there’s an amount included in Box C (full-time enrolment), you will be eligible for this deduction. It’s also worth knowing that you can deduct multiple moving expenses in one tax year.
4. Childcare deduction
If you’re a parent, you may be eligible to deduct childcare expenses. Generally, a childcare deduction is available to persons attending school and paying for the care of a child younger than 16 (or a child older than 16 if he or she has a disability). Married and common-law students can transfer this deduction to their spouse. If your partner has a higher income, this will lower your household’s tax burden.
Student Debt Help in Ottawa and Across Eastern Ontario
Despite the tax perks, attending university is pricey and many people struggle with student loan debt. If your debt is causing you issues, you can get help from a licensed insolvency trustee. The professionals at D. & A. MacLeod in Ottawa can provide you with a free, no-obligation consultation to discuss your needs and develop a debt solution. Contact us today!