If you're under 35, you've more than likely experienced one or more of the following major life changes in the past year: getting married, starting a family, moving homes, losing a job or starting a new one. All of these changes can effect a tax return. Taxpayers under 35, however, also have the lowest awareness of common tax credits and deductions, according to a recent survey by Angus Reid Public Opinion.
Karen Yull, a tax specialist at Grant Thornton LLP, thinks the lack of tax knowledge among this age group could have to do with how little they know about preparing and filing them. Someone who has a professional do their taxes, or relies on software, is either handing over a pile of papers or being prompted through the information. Unlike older Canadians, this age group has likely never had to prepare their own taxes manually, something that usually requires more thought and insight than preparing with software.
Whether you're using help or taking the do-it-yourself route, you should take note of some of the most commonly overlooked credits and deductions for those under 35, as explained by Ms. Yull, to determine how you can take advantage of them this tax season.
Home Renovation Tax Credit By now we've all heard enough about the Home Renovation Tax Credit. We likely know that we can claim up to $10,000 worth of repairs. Anything that is considered to be integral to the value of your home, such as putting in a new floor, painting the interior or exterior, installing a new pool liner or even a home security system, can be claimed, according to Ms. Yull. The first $1,000 is the threshold but amounts after that are credited at 15 per cent, she said. Smaller renovations and repairs shouldn't be discounted because they can add up. If you spent $2,000, for example, that's a credit of $150. If you've done any type of repairs this year, confirm what is eligible to claim and start gathering up your receipts.
Moving expenses If you've packed up your U-Haul and travelled more than 40 kilometres for a move in the past year, then you may be able to claim moving expenses against your new employment income. Deductible expenses can include transportation, storage and meals. Moving expenses were recently identified by the Canada Revenue Agency as the number one EFILE adjustment, so make sure you understand if your move qualifies and what you can deduct.
Children's Fitness tax credit This credit has only been available for a few years, so some parents still aren't aware they can claim fitness expenses for their children, says Ms. Yull. You can claim up to a maximum of $500 per child, and it's based on eligible expenses paid by parents. Claiming the full amount will equal a $75 tax credit for your family.
Public Transit Being sandwiched between other morning commuters isn't always the nicest way to travel, but if you're taking transit, then you're helping the cause and likely saving some cash in the process. You can see just how much by calculating the cost of commuting by car versus transit. While travelling by transit is cheaper, it's certainly not cheap. The good news is that there is no limit or threshold to what you can claim. Whatever you pay qualifies for credit. You can also claim your dependants if they take transit to work or to school. Ensure you've got what you need to qualify for the credit before tax time this year, or make note of what you should hang on to for next year.
First-time Home Buyers' Tax Credit If you purchased a home after Jan. 27, 2009, then you are eligible for a tax credit based on an amount of $5,000. For 2009, the non-refundable tax credit is $750. This is a new initiative and unless you make the claim, it's unlikely that your tax software will prompt you to do so, says Ms. Yull.
If you've experienced one or more costly life changes in the past year, then chances are you could use a bit of a tax break, so take full advantage of credits and deductions by being aware of what you can rightfully claim. Plus, with all of the essential tax information online and available to you, there's no reason why your grandma should be outsmarting you at tax time.
Follow us on Twitter: