Yahoo Finance Taxes 2024: Deductions you don't want to miss that could help you get a bigger return
Missing a credit or forgetting a benefit when you do your taxes this year could end up being the difference between owing the government money and getting a refund.
While you may not be able to add to your RRSP contributions for the 2023 tax year, experts say there are some lesser-known deductions that Canadians can take advantage of ahead of the April 30 tax deadline.
Yahoo Finance Canada spoke to Brenda Hiscock, certified financial planner at Objective Financial Partners, and Jackie Porter, certified financial planner at Carte Wealth Management, about the credits Canadians should be aware of going into tax season.
Expenses that are tax-deductible
While the Canada Revenue Agency (CRA) has made filing expenses for people who work from home more complicated this year, Hiscock says there are plenty of little-known expenses that are tax-deductible which Canadians might be missing out on.
For example, there are credits available for children’s summer camps, investment expenses on their non-registered accounts, alimony payments, and moving costs.
“One of them that sometimes gets overlooked is the Canadian employment amount, where you can get credit for uniforms, work supplies, up to $1,368 per year,” Hiscock said.
"If you subscribe to a Canadian news source, you can write off the cost of your subscription and then, of course, charitable donations for people with high income offer excellent tax benefits.”
Additionally, Canadians with celiac disease are able to deduct the difference in price between regular bread and gluten-free options, though this requires a lot of tracking, Hiscock says.
Paying for medical expenses? You could get a deduction
Medical expenses can also help with tax deductions, but they only qualify if they amount to three per cent of someone’s net income, or $2,635, Hiscock says. They can also be transferred between spouses, so Hiscock recommends using them on the spouse with the lower annual salary, as it’s easier to hit that three per cent mark.
“Many people don't realize that part of the medical expenses that you can write off are your group plan premiums for your health plan and dental plan premiums,” she added.
Additionally, the disability tax credit is available for people with severe and prolonged impairment, but Hiscock says many Canadians don’t realize that their condition qualifies.
“It's worth chatting with your doctor, because I have many clients whom I have worked with who have gone to their doctor and discovered that, in fact, it is worth submitting an application for the disability tax credit and it can be backdated up to 10 years,” he said.
Any medical equipment, such as cane or wheelchair, and any home modifications made due to a medical condition also qualify, Hiscock says.
When in doubt, speak to a professional
Porter says speaking to an accountant can help to maximize tax returns and make sure the filing is done correctly, especially in circumstances where it may not be straightforward.
"These are conversations to have with your tax expert to see how you can take advantage of, maybe you have a side hustle,” she said. “The important thing when you have a side hustle is to be super organized, because the government doesn't care that you have a side hustle or even that you have a business number, they want to know that you have a very good paper trail of the income.”
In cases where a filing may have a lot of moving parts, such as someone with a side hustle, Porter says it’s important to speak with a professional early in the process.
"You’ve got to be proactive,” she said. “You should be having these conversations with them at a time of the year that makes sense for them, where they can actually give you time and space and truly help you to be more strategic when it comes to how much income tax you pay.”
Make strategic RRSP contributions
Contributing to an RRSP account is the easiest and most common way to get a serious tax refund and help with saving up for retirement.
Porter says generally speaking, the magic number for the RRSP contributions is 18 per cent of your income, up to the maximum of $30,780.
Additionally, for spouses, the majority of the RRSP contributions should be added to the account of the spouse with the higher income, as they are likely to be taxed at a higher rate.
“If I'm someone who is in a 34-per-cent personal tax bracket and my spouse is in a 46-per-cent tax bracket, for every dollar, I only get back 34 cents on it. For every dollar, my spouse gets back 46 cents,” Porter said.
“If we want to maximize our credits, we should be making the contributions strategically. Our spouses should be making the contribution, so we bring home more money as a family.”
The deadline for RRSP contributions was Feb. 29 this year. If you missed the deadline, your contributions will count towards next year’s tax filing.
Ben Cousins is a freelance journalist based in Toronto. Follow him on Twitter @cousins_ben.
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