Are you familiar with all the income tax deductions available to you?
Below are a number of common income tax deductions that individuals don’t realize they are eligible to claim on their personal income tax return.
Moving Expenses
Did you recently move to start a new job (or move closer to a current job) or to attend school? This is often a very lucrative tax deduction, especially when it involves the sale of a house. While only certain moves and expenses are eligible, they can sometimes result in thousands of dollars of tax savings.
Safety Deposit Box
While it might not be the biggest of deductions, don’t forget about that old SDB. Chances are the bank deducts it directly from your account every year and you don’t even realize you pay for it. So why not claim it? Every little bit helps, right?
Interest Expenses
Did you take out a loan to make an investment (not including investments in your RRSP)? If so, you can deduct the interest you pay on this loan as long as it was used to purchase investments with the anticipation of earning some type of investment income.
Capital Losses
Most people know that they can use losses on their investments to offset gains? Most people do not know though that there is some strategy in when you buy and sell your investments to maximize the use of any tax losses you have available. Additionally, losses from investments in the current year can be carried back and applied against investment gains in prior years to generate an instant refund.
Medical Expenses
Medical expenses for the entire family, including premiums paid into private health care plans through your employer, can be deducted on your income tax return. There is a minimum threshold that you have to meet (the lesser of $2,109 or 3% of your taxable income), but you’d be surprised at how they can add up quickly. Usually the expenses should be claimed by the person with the lower net income. Additionally, you can strategize the timing of when you make the claim to maximize the deduction.
Child Fitness or Arts Programs
You can claim up to $500 in deductions for each child for each of fitness programs and arts programs. Swimming lessons, hockey, soccer, drama, painting, etc. are all eligible.
Lost Charitable Donations
Often times you’ll find an old charitable tax receipt that you didn’t include on your tax return. Not to worry, you can still deduct it! Its important also to pool charitable donations together with your person and have the person with the higher income claim them.
Stay Organized
These are just some of the many income tax deductions that you may be eligible to claim on your tax return. There are likely many more. Its important to stay organized throughout the year to ensure you claim everything that you are eligible for. A word of advice: I tell all my clients when I finish their tax return to create a folder for the next years tax return and put all the receipts you receive in that folder, even if you’re not sure if you can deduct it. This way when its time to prepare your taxes next year, you’re organized and ready to go.
If you want more information about any of the income tax deductions above, or have other personal income tax questions, contact us today. Chris Alexander is a Chartered Accountant with significant personal tax experience. He may be contacted at chris@cjaps.ca or 905-334-6674.
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