10 ways to reduce your tax bill
The days are starting to get longer, and you can feel that spring is right around the corner. With spring, of course, comes tax-filing season, so as “filing taxes” joins “spring cleaning” on your to-do list, here are 10 ways to save you money—and even land you that refund you’ve been hoping for.
• Tax-free savings account: Using a TFSA is a smart way to save on tax. Generally, the interest, dividends, and capital gains earned on investments in a TFSA are not taxed—not when they are held in the account or when they are withdrawn.
• Registered retirement savings plan: Pay less tax and save for your retirement at the same time. Any income that you earn in your RRSP is usually free from tax as long as the funds stay in the plan.
• Charitable donations: Donations of cash, goods, land, or listed securities made to a registered charity or other qualified donee may be eligible for a tax credit.
• Parents: All those mornings spent at the hockey rink and afternoons spent at the ballet studio can mean savings—with the children’s fitness and arts tax credits. Child care is also deductible, so gather up your receipts.
• Family caregivers: If you have a dependant with a physical or mental impairment, you could be eligible for an additional $2,000 this year with the new family caregiver amount.
• Student: Were you a student in 2012? You may be able to claim tuition, textbook, and education amounts, as well as moving expenses if applicable. And if you’ve recently graduated, you can claim the interest you paid on your student loan.
• Public transit amount: If you are a public transit rider, you may be able to save by claiming the cost of your transit passes. You can get up to 15% of the amount claimed.
• Seniors: If you receive income from a pension, you can split up to 50% of eligible pension income with your spouse or common-law partner to reduce the taxes that you pay. You may also be eligible to claim the age amount, medical expenses, and the disability amount.
• Home buyers: You may be able to claim up to $5,000 if you bought your first home in 2012.
• Hiring an apprentice: Did your business employ an apprentice? An employer who paid a salary to an employee registered in a prescribed trade in the first two years of his or her apprenticeship contract qualifies for a non-refundable tax credit.
Make filing your taxes this spring even easier by doing it online. It’s fast, secure and you may be able to use cost-free filing software. The Canada Revenue Agency offers step-by-step instructions at www.cra.gc.ca/getready.
Source: News Canada