Written for Daily Hive by Jennifer Gorman, TurboTax Canada’s head of customer success self-help.
Higher learning is expensive and students are often too busy studying for a full-time or even a part-time job. To cover both tuition and cost of living without working full time, many students rely on loans and will have zero or low income while in school.
Even if you’re not making any income, it’s important that you file your taxes every year to ensure you’re receiving the tax credits you may be eligible for. Below are five tips that will make filing easy for students and help maximize their return.
Here are five ways students can maximize their tax return and get more money back:
Post-secondary tuition costs are high, but the good news is that higher-learning schools will provide you with a tax certificate each year, outlining expenses that are eligible for the tuition credit. Usually, you can find your tax certificate in your online student account.
Tuition credits are non-refundable credits. That means that they lower your tax payable but don’t produce a refund on their own. If you’re not making much income as a student, don’t worry: your tuition credit can be transferred to your parents or spouse when you’re in school, or, you can choose to carry forward tuition credits and use them in the future when your income may be higher. Tuition credits do not expire.
While you may not be paying taxes on any income, it’s important to file your tax return every year to take advantage of benefits like the GST credit. The GST credit is an income-tested benefit, which means that if you’re income is low, you’ll likely qualify. If you’re a student, there’s a good chance you’re eligible to receive this credit.
The GST credit is calculated automatically when you file your tax return. Just file your return and if you qualify you will begin to receive quarterly payments!
If you’re new to filing, the process may sound daunting. If you aren’t sure where to start, an intuitive online software that calls out different credits and benefits based on the personal information you provide could be helpful. For most students, I recommend the Standard version of TurboTax Online because of its easy-to-understand interview questions; and because it takes you through over 400 deductions (including tuition credits).
Students who file online will also be considered for tax credits they may be eligible for that they didn’t even know about. It also comes at a lower cost than an accountant or tax shop, takes less time and can be done from the comfort of your dorm room.
As soon as students relying on government loans graduate and are in repayment mode, they are eligible for a deduction on qualifying student loan interest payments. This is a non-refundable tax credit that can easily be claimed by entering the interest you paid on line 319 of your income tax return. Students should be sure to claim any corresponding provincial or territorial credits as well, by entering the amount of their student loan interest on line 5852 of their provincial income tax return.
Your student interest claim will deduct your amount owing, but cannot translate into a refund. For this reason, you should not claim your student loan interest during a year when you don’t owe a lot of taxes. Instead, save the claim and carry it forward to a future year. The CRA allows you to carry forward student loan interest for five years.
So you’ve filed and have received your tax refund. Great! While there will always be the temptation to blow it straight away on the latest tech or a new spring wardrobe, there are smarter ways to invest your tax refund that you will be thankful for in the long-run, including ways that will help maximize your return in future years.
If you’re a student who received a refund this year, consider investing your refund. For example, you might consider investing in a TFSA (it’s never too early!) or using it to help reduce any high-interest debt. It might not seem like a lot of money, but a little compounded interest goes a long way in the long term!
To learn more about how to file your taxes as a student or how to file your taxes for free, visit https://turbotax.intuit.ca/tips/.