How to Maximize Tax Return 2022 in Canada
With rising interest rates every Canadians are experiencing strains caused by the increased cost of living and inflation. Claiming tax deductions & credits can help offset the financial burden by putting extra money back in your pocket.
In order to maximize your tax return, you need to calculate your taxable income first and then lower it using as many tax deductions and credits as possible. Before we get into the different kinds, it’s helpful to know the difference between a tax credit and a deduction. A tax deduction reduces your taxable income, while a tax credit minimizes the amount of tax you owe.
Check out our list of tips and tricks to see how you can use tax credits and tax deductions to get more money back this tax season.
Use Deductions Available
Registered Retirement Savings Plans (RRSP) are a great way to maximize your tax refund. Used primarily to save for retirement, RRSPs also provide tax relief since you’re able to deduct your contributions from your taxable income. You can contribute to your RRSP by March 1, 2023, and have it count toward your 2022 taxable income. Reminder! You’re allowed to contribute up to 18 percent of your income annually (to a maximum of $29,210 for 2022), and if you don’t use the room, it’s carried forward.
Deduct Child care expenses
Did you pay someone else to look after your little ones while you worked or advanced your education? Did you send them to a day camp or summer camp? The government lets you deduct up to $8,000 per child annually for children under seven years of age, or up to $5,000 per child for those aged seven to 16. For disabled children of any age who qualify for the disability tax credit, the maximum claim is $11,000. If the disabled child is 16 or older and does not qualify for the disability tax credit, the maximum claim is $5,000.
Deduct Home office expenses
If you work at home, you can claim expenses for your home office, such as internet bills, stationery, and more. If you worked at home more than % of the time throughout 2020, for a minimum of four weeks, you can claim 2$ per day. The maximum amount that can be claimed is $500 per individual in 2022. You must complete Form T777S or Form T777 and get a completed Form T2200S or Form T2200 from your employer.
Deduct Moving expenses
If you moved more than 40 kilometres to work or run your business, or you moved to study as a full-time student. Eligible, deductible moving expenses include vehicle expenses, accommodation, costs for utility hookups and disconnection, and title transfer costs.
Deduct Capital Loss
If you’ve lost money on investments in the stock market, make sure you record your capital loss. If you experience capital gains in a future year, your record of capital loss can offset the gains.
Claim Tax Credits
Expenses relating to medical issues that are not covered by your healthcare, such as ambulance services or therapy animals, can be claimed on your taxes.
Depending on which province you live in and how much you donated, you could qualify for a significant tax credit. At the federal level, you can be credited 15% on the first $200 you donated. Any donation amounts above that are credited at 29%.
Interest paid on student loans and tuition expenses
You can claim any interest on your student loans as a non-refundable credit. To help students and graduates offset some of the financial burden of repaying student loans, the CRA offers a deduction for qualifying student loan interest payments.
You can carry forward any unclaimed student loan interest to any of the next five years, so be sure to keep those documents in order.
Tax time can be stressful for many Canadians. With so many records and information to keep track of, it can be intimidating. If you’re unsure which tax deduction & tax credits you may be eligible for, it may be a good idea to consider hiring an accountant to help you file. While your accountant may charge money upfront, the amount that they could help you save may be far more.
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