If the cost of tuition wasn’t enough, inflation means attending college or university in 2023 is even pricier than expected. What’s a first year to do? This story is part of a crash course in personal finance for students and parents. Read the full guide.
Taxes aren’t the most exciting thing to think about as a new school year comes to a start. But Eric Wagner, a TurboTax expert and chartered professional accountant, says students who do their due diligence can get upward of $1,000 back as a result of filing a tax return. Here’s some of Mr. Wagner’s advice on what you can do right now to maximize the money you get back at tax time.
Keep receipts for any education-related expenses
Chances are that some receipts won’t be usable, but Mr. Wagner says the federal tax code works in all sorts of unexpected ways in terms of what can and can’t be expensed.
For example, school application fees, required equipment for courses and student ID fees are all things you can expense on your tax return.
On the other hand, textbooks and laptops cannot be deducted from federal taxes, but are deductible in some provinces. Mr. Wagner says your best bet is to keep as many receipts as you can and work with a specialist during tax season to correctly deduct as many expenses as possible.
Moving expenses can also be deducted, but only under certain conditions
You can deduct the cost of moving for university, such as the rental of a moving truck or overnight accommodation. But there are two key conditions: the move must be at least 40 kilometres, and unlike some other tax benefits for students, you must be working in your new locale to qualify.
If you can’t benefit from student-related tax benefits, your family is able to
Many students may not work enough to take full advantage of benefits they’re eligible for because their taxable income is so low that there’s nothing to deduct from. In that case, certain tax credits can be transferred to a spouse, parents or grandparents to use on their tax return.
For example, up to $5,000 in tuition credits can be transferred to a family member. Federally, this amounts to roughly $750 back on a family member’s tax return, Mr. Wagner says. Some provinces provide similar benefits, which can add hundreds more dollars to that amount.
A T2202 is needed to get your tuition credits. Not all schools make getting one easy
Tuition credits are perhaps the largest credit you have access to as a student. You need a specific form, called a T2202 certificate, to claim them.
At most universities and colleges, the form can be accessed through your online portal at the institution. Mr. Wagner says the process can be more involved at smaller postsecondary institutions that offer one-year diplomas.
Scholarships and bursaries are often exempt from taxation, but not always
As a general rule, Mr. Wagner says full-time students don’t have to worry about paying tax on scholarships they receive.
This is not the case for part-time students, who are only able to earn $500 in scholarship money tax-free. Any amount over that will be taxed, so students should set aside some of the money they received in case they owe after filing their return.
It’s in your best interest to file taxes even if you don’t have a job or didn’t make any income
By filing taxes, you become eligible for benefits such as GST/HST rebates, the climate action incentive payment (a tax-free payment to offset the costs of carbon pricing) and other provincial tax rebates. These programs can add up to hundreds of dollars of what Mr. Wagner calls “free money.”