Getting ready to file your first tax return might be daunting, but it doesn’t have to be. Filing your taxes is an empowering experience that will help you better understand your financial situation. Plus, we can help!
Need help calculating your taxes?
Check out this helpful resource to learn how tax software calculates your taxes.
We offer do-it-yourself tax clinics throughout the month of March. During these sessions, we’ll teach you how to file using Wealthsimple Tax. Or, sign up for a free online tax appointment to have your tax return prepared by a trained Tax Squad volunteer.
Notice for international students living outside of Canada
Please note that tax filing requirements and your ability to access tax benefits and credits are based on residency. It is not based on immigration status or citizenship. To determine your residence status, all of the relevant facts in each case must be considered, including residential ties with Canada and length of time, object, intent and continuity while living inside and outside Canada. If you have left Canada during your studies, your particular circumstances will determine your residency status. Determine your residency status on the CRA website.
If you have questions, contact 1-800-959-8281 (9:00 a.m. – 9:00 p.m. EST). Or, you can fill out Form NR73 – Determination of Residency Status (leaving Canada) and mail or fax it to the CRA office (this information is contained on the form).
Tax deductions are viewed as more valuable because they can generate bigger savings. Deductions are subtracted directly from your taxable income. You do not have to multiply this deduction by a percentage. For example, if you earned $20,000 and made a $1,000 RRSP deduction, your taxable income would be reduced to $19,000 (you will be taxed only for this amount). Students typically miss out on claiming eligible moving expenses, which are considered deductions.
Most tax credits are non-refundable, which means that they can’t generate a tax refund on their own. You need to owe income tax during the year in order to benefit from the tax credit. This means paying less tax and getting a tax refund. Tax credits are calculated at the lowest marginal tax rate (15% for federal and 5.05% for Ontario). These tax credits are contained on Schedule 1 of the T1 return.
Some credits can be carried forward until you are eligible to use them. To claim these credits and carry them forward, you must file a tax return, even if you are not generating an income. When you are earning an income and paying taxes, you can claim these credits to generate a tax refund.
Examples of expenses that can be carried forward include:
- Disability amount: Deduction is available for persons with prolonged mental and physical impairments. To qualify, you must have adequate documentation from a doctor (T). For more information, visit the CRA website.
- Student loan interest: This includes loans received under the Canada Student Loans Act or the Canada Student Financial Assistance Act. This does not include interest from a student or personal line of credit. Only you can claim this deduction. If you do not have enough taxable income to utilize the credit, do not claim it that year; instead, carry it forward and use it to reduce your taxes in the future. The time limit is 5 years.
- Tuition: These amounts can also be transferred to your spouse/partner, parents or grandparents if you do not need them and do not want to carry them forward. There is a $5,000 limit on the amount that you can transfer. The difference can be carried over.
- Note: Eligible tuition fees do not include student association fees, transportation and parking, meals and lodging and books.