Ways to maximize your tax return

Canada has a lot of tax credits and deductions which you should know off. This is especially hard because there are twelve to fifteen new federal or provincial tax credits introduced every year. You will have to quit your daily job in order to optimize your return to the maximum possible by research.

Please do not panic and do not make yourself a martyr just yet. You can also use some approaches which will allow you to get most out of a tax return. It is the same thing with taking on a complicated process; you should tackle small portions at a time. Ensure that you adhere to the following best practices so as to have the greatest number of tax returns.

• Thoroughly Input Personal Information

Make sure to enter all your personal details with great care. This will help you compute your tax returns correctly as well as ensure that you get all the required deductions.

• Claim All Eligible Credits and Deductions

Take advantage of a potentially large savings; make sure to claim all your available credits and deductions. Any saving opportunity is of paramount importance.

• Update Dependent Information

You should also update the information about a dependent person or persons that are included in your plan. This could also help you save more money in the next year’s tax returns.

• Include Carryforwards

Include all carryovers which comprise of donations, tuition fees, capital and non-capital loss, and RRSP deduction threshold. You should be careful to make sure that you do not lose credit towards anything that you’ve already earned in the past.

By following these steps, it is possible for you to maneuver through the complicated tax system and prevent yourself from missing on any possible gains. However, remember to be very structured with this matter and try as much as you can to take action to get the best out of your tax returns.

Here are 5 ways in which you can maximize your tax return in Canada

1. Optimize Your Refund by Inputting All Tax Slips

We know that everyone’s income and finances can vary in Canada. But the one thing common is tax slips to track inputs. When you have all the tax slips, you can ensure that the tax is filed properly and you can also avail all the deductions that you are eligible for.

• Employment Income

When preparing your tax returns if you are currently employed, make sure your wages are correctly deducted and included in your annual income. Examples include monthly wages from one or several employers reported on a T4 slip. Lastly, ensure to enter your income streams from your T2125 filing if you are self-employed.

• Retirement Income

It becomes important for the retirees to capture every source of the retirement income. Such pension income should be indicated on the T4A form. Ensuring the accuracy of each component when filing T4RIF slip and T4RSP slip for income from either can result in an increase of tax credit receivable at the end of the year.

• Investment Income

There is a high likelihood that your investment will be categorized under T5 and T3 slips which refer to different forms of earnings on investments made outside certified accounts. All the same, these slips must form part of your tax return if you are to give a full picture of your finances. Additionally, make sure that if you have sold any investment in this last one, you must include them too in your comprehensive and exact taxation T5008 form.

Spending this much time on entering all of these income sources makes sure that your tax returns reflect your total finances. This means that by being careful in ensuring that your employment, retirement and investment income is reported; you are able to comply with the tax laws while at the same time, position yourself to enjoy these benefits.

2. Claim all the deductions that you are eligible for

Declaring of all possible allowed tax deductions is another way to get the highest amount of money from your taxes. Here are some noteworthy deductions to focus on.

• Registered Retirement Savings Plan (RRSP) Contributions

To find the contribution room for your RRSP, you may refer to your latest NOA or check your account online at the CRA site. You can get the largest deduction if you make the highest allowed contribution at a time (the maximum contribution within means or up to the specified limit). Know that you can make contributions on your salary during this period and such an opportunity lasts for approximately sixty days after the end of the year.

• Child Care Credit

This Child Care Credit may advantage family members, who have kids. The amount could be between $8,000 for kids below seven years old and $5,000 for kids between seven and sixteen years old. Deducting this amount helps in reducing the expenditure on child care expenses.

• Other Deductions

Explore the comprehensive list of deductions offered at the Canadian Revenue Agency website if you are not sure about other credits you could get. Some of these are investment related deductions, disability support deduction, moving expenses, child support, alimony, etc. A careful assessment of these prospects means you do not miss any appropriate credits thus generating a big return.

This allows you to claim for deduction at a higher rate especially in areas such as RGSS contribution, kids care fees and various other qualified deductibles enhancing your odds at getting the highest possible tax refund. It is a good idea to investigate all of the possible allowances and modify your strategy to match your specific budgetary situation.

3. Claim all eligible credits to maximize tax benefits

Think that have tried all possible ways of minimizing taxes? Before you conclude, consider these tax credits that might offer additional benefits:

• Canada Employment Amount

You will automatically qualify as long as yours incur expenditures related to uniform, footwear, clothes, and supplies used during employment. This is an easy and convenient way of mitigating the costs associated with incurred expenses on employment activities.

• Charitable Donations

Get a return ranging from 15 percent to 33 percent on your charity money. You can also benefit further if strategically combine your donation over five years’ period, then claim it together in one go. Through this, one can reduce their tax liability and make good at the same time.

• Tuition Tax Credit

You will be awarded 15% credit towards your tuition fees. This credit offers financial help to students and those supporting them, considering that there is a great load attached to studying.

• Digital News Subscription Credit

A subscriber to a Canadian press? This is a deductible expense as you may claim it in your tax returns. Inform yourself and gain tax credit at the same time.

• Exploring Other Credits

However, do not forget many other tax credits. Carry out exhaustive research to be sure that you do not miss on credits or deductions. A comprehensive analysis of such specific industry-based credits as well as specific individual circumstances may disclose extra savings.

Ensure that you have a chance of obtaining several different deductions by exploring these credits before submitting your final income tax. Such a proactive approach will be beneficial for obtaining better tax outcomes against various available tax credits for taxpayers.

4. Review and update your dependent information

Doing so enables you to take all applicable tax credits on dependents. The number and age of dependent children contribute to different tax credits in Canada like CCB or Child Care Expense deduction. These credits have to be optimized by appropriately reflecting your current dependency status in order for you to have an opportunity of getting maximum tax refund.

Besides, some Canadian provinces provide other dependent-related tax credits and rebates, according to their numbers and ages. You update your dependent information so that you will still benefit from your province’s programs and credits.

• Child Care Expenses

In cases of child care costs, it is vital to update your dependent information so that you can deduct your child care expense. Additionally, this deduction results in lowering your taxable earnings and ultimately, an increased chance for a larger refund, whereby you pay less taxes on up to thirty percent of allowable childcare costs.

• Education Credits

It is important to ensure that one’s dependents, if any, are in post-secondary education for purposes of claiming tax based on tuition. Credit may be used towards college expenses, thereby increasing the total amount for tax refund.

• Disability Credits

Updating dependent information for people taking care of dependents with disabilities helps them to claim tax credits and benefits linked to disability. Such credits are used for subsidy purposes which may reduce one’s total tax burden.

5. Incorporate all capital losses to maximize your tax return

When things go well for you and you decide to sell some of the investments you hold in a non-registered account, it is likely that you will be required to pay capital gains taxes. However, do not forget that any previous year’s losses are subjected for use when set off against capital gain.

Consider your entire financial picture. Remember that you have capital gains and not just capital losses useful in tax minimization. You may want to strike a healthy balance between capital gains and losses so that you maximize on tax.

In case your capital losses would surpass all of your capital gains, you might be allowed to carry over that particular amount to future accounting periods. This may offer an opportunity to spread out the use of losses and extend the period over which you would use these losses to off-set gains that will come along in subsequent years.