Making your cents make sense.
Three things in life are unavoidable: sickness, heartbreak, and taxes. The first two are undeniably unpleasant. But, taxes don’t have to be.
Sure, they can be confusing, but chances are any questions you have are easily Google-able. Lucky for you, though, you don’t even have to Google them—IGNITE already did it for you!
That’s not all. IGNITE has also put together a foolproof guide to filing your taxes online, meaning you can score that tax return in time for summer without having to pony up for an accountant.
But, before you get started, be sure to read through these common tax myths so you head into the process levelheaded and informed:
MYTH: Students don’t need to file returns
Being a post-secondary student doesn’t automatically bar you from having to file your taxes. If you received any income this year from part- or full-time employment, scholarships, bursaries, or grants, you’ll need to submit an income tax return.
However, being a student does qualify you for certain tax deductions that could result in a full or partial refund on your education-related expenses. For example, did you know you could claim your moving expenses if you’ve relocated to attend school?
Learn more about student-specific tax deductions by checking out IGNITE’s list of five things you didn’t know you could claim.
MYTH: All students qualify for a tuition tax credit
Unfortunately, this rule isn’t so cut and dry.
If your student fees and/or tuition were paid or reimbursed by your employer or your parent’s employer, and that amount was not included in your or your parent’s regular income, you can’t claim your tuition amount on your tax return.
It’s like this: if you work for McDonald’s and they paid your tuition, you can’t claim it. But, if you work for McDonald’s and you used the money you earned to pay your tuition, you can claim it.
This rule also applies to educational fees paid by job training programs and federal programs designed to support athletes.
In short: to find out if you qualify for a tuition tax credit, find out who paid your tuition.
MYTH: Tips and gratuities don’t need to be filed
If you work as a server, host, DJ, delivery driver or freelance, you likely receive tips. It’s easy to pocket these without thinking, but they count as income too and thus need to be filed along with the rest of your wages.
Luckily, filing your tips and gratuities is incredibly straightforward. Simply keep track of the amount you earn between January 1 and December 31 and write that number down on line 10400 of your tax return!
If you’re an employee, your tip amount may be included on your annual T4 slip. However, if you’re self-employed or if your employer doesn’t include this amount in your paperwork, you’ll have to keep track on your own.
Apps like Server Life are great for this—you can record your tips and work schedule, see your daily averages, set goals, compare shifts, and log multiple jobs all in one place!
Or, just have IGNITE’s trained tax volunteers handle it at our Tax Clinic.
MYTH: The CRA uses email for “e-audits”
The world may have gone digital, but that doesn’t mean snail mail and in-person communication are dead. Although it’s great for a lot of things, the internet is not a secure medium of communication; data breaches and email privacy violations happen all the time.
As a rule of thumb, the CRA (or any financial institution, for that matter) will never ask you for personal details electronically. Requests for sensitive information while pretending to be an authoritative entity is a common scam known as phishing; if it happens to you, it should be reported to your tax services office immediately.
MYTH: All transit fares can be claimed
Canada’s public transit tax credit applies only to yearly, monthly and weekly passes, as well as electronic payment cards (like PRESTO) used on an ongoing basis.
So, that one-off trip to Canada’s Wonderland last summer? It can’t be claimed. But, if you buy annual or monthly passes for your commute to school, you’re eligible for a 15 per cent tax credit.
Turns out the TTC is good for something after all.
MYTH: Tax laws can’t be enforced
This one’s just plain wrong.
The common false impression comes from a misinterpretation of a 1950 Supreme Court case involving the federal government and the Lord Nelson Hotel in Halifax. Essentially, it determined the government of Nova Scotia and Parliament in Ottawa could not pawn off certain specific legislative duties onto each other.
Because issues of taxation were among the legislative duties in question, some people have begun to assert this case determined income tax is unconstitutional.
It isn’t. There’s no way around it—you have to pay your income tax.
The good news is that your tax money helps pay for things like universal healthcare, libraries, swimming pools and emergency services. The better news is that when you file your taxes, you’ll get back any money you overpaid in the form of a tax return.
The best news is that IGNITE is here to make processing your paperwork a breeze.
Now that you understand the faults in these financial fallacies, go ahead and follow along with IGNITE’s five easy steps to online filing!
The end of the semester is on its way, and soon your spending money will be too.
Make more money moves with IGNITE’s video guide to price matching.
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