By Brenda Spiering
Are you still in school and not earning enough money to pay income tax? Never mind, it’s also in your best interest to file a tax return to avoid missing out on amounts to which you may be entitled.
If you’re still in school, you may not yet be earning enough money to pay income tax. Then you have no reason to file a tax return, do you?
It’s wrong. By not filing taxes, you may be missing out on amounts you may be entitled to, in the form of tax refunds or tax credits, says accountant Allan Fefergrad of firm Better Tax. Services in Montreal. And, as he wrote in the well-known blog Financial Highway, “the government won’t come knocking on your door and tell you that if you report your income, you’ll be entitled to that money.”
Are you still hesitating about filing a tax return? Here are five good reasons to do so:
- Tax refund
Each Canadian benefits from deducting a basic personal amount (for 2013, it is $11,038). This means you pay no tax on earned income equal to or less than this amount. However, if you worked during the year, your employer may have deducted federal and provincial income tax from your pay. If so, you are eligible for reimbursement of this amount in whole or in part. (Note: Scholarships are tax-exempt — you don’t even have to report them on your tax return.) - Tax credits
You can deduct your tuition fees on your tax return through the federal tuition tax credit. You can also claim an education amount of $400 for each month you were enrolled full-time or $120 for each month you were enrolled part-time, as well as a textbook amount of $65 $ for each month in the year you are eligible for the education amount as a full-time student and $20 for each month in the year you qualify for the education amount as a student part-time. If your income is not enough to claim these deductions, you can defer the credits until later, when you earn more income. If your tax amount has been reduced to zero, you can also transfer the credits to a parent, grandfather or grandmother, spouse or common-law partner. - Student loans
You can claim a deduction for interest paid on qualifying student loans, such as those issued to you under federal or federal student financial assistance law. If you don’t use the credit, you can carry it forward for five years, but you can’t transfer it to anyone else. - GST/HST Credit
Even if you didn’t have a job during the school year, you might be eligible for the GST/HST credit, intended to help low- and modest-income Canadians manage the additional cost of tax. On products and services. This credit is paid four times a year. However, if you do not file a tax return, you will not be eligible. (Note: you must be 19 or older to qualify for this credit.)
