Remember the first time you borrowed the car? The first time you got drunk? The first time you filed a tax return?
Go ahead, laugh, but filing your first return as a teenager or young adult will leave its mark on your memory once you get that first refund cheque from the government.
Write it down: Refundable tax credits mean free money. You can be earning absolutely zilch and paying exactly zero taxes, but you are entitled to these tax credits. All you have to do is be at least 18 years old and ... file a return.
Here are a few tips for first-time tax filers, courtesy our friends at H&R Block. All you need is a social insurance number (SIN). And for most young Canadians, it is pretty straightforward.
1. Report your income. If you earned income in 2010, you need to file a tax return. Even if you earned no income in 2010, if you turn 19 before April 2012, you should file a return because you will qualify for the GST/HST credit. You can only get it if you file.
2. You can't file electronically the first time. As if tax filing wasn't enough of a pain, the Canada Revenue Agency does not allow you to file electronically unless you have submitted a previous return. You will need to mail your tax forms and wait for your Notice of Assessment, unless you're willing to pay a tax-preparer to do the job on your behalf.
3. Get organised and keep your receipts. If you think it could be a tax deduction, keep the receipt and find out later. Did you sponsor a friend who ran for cancer research or buy a bus pass? Charitable donations, as well as medical expenses and some transit passes are tax deductions.
4. Do a little homework. Lots of people will offer tax advice but not all of it is true. For example, you can only deduct employment and moving expenses under specific circumstances. Make sure you do enough reading to understand what you can and can't claim.
5. Look to the future. You may not be able to contribute much to a Registered Retirement Savings Plan (RRSP) right away but make sure you report income and start building contribution room. This means you will be able to make larger deposits once you start earning more money, and your deposits will help you pay less tax.
6. School expenses: You may be able to claim tuition fees and textbooks. You can also claim interest paid on student loans, under certain circumstances. You could also get exemptions for scholarship income.