New Job First Job First Tax Return-What Does It Mean for Your Wallet #CDNmoney

In today’s world, all of us go through major life events more often. We are a fast paced world with change being part of the fabric of our every day. This past year, there were some major shifts in my life. I went from being a freelancer to having a full-time role with a great company. I love my new job. My teen is also facing change as she graduated from high school and well it is time for college and the work force. So what do all these changes mean come tax time? These are normal changes that almost every Canadian family will face at one time or another.

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What Does a New Job mean?

First, let’s talk about the taxes. Whenever a Canadian gets a new job with a new employer, all of your employment insurance and Canadian pension plan are reset for the fiscal year. This means you may be due an overpayment come tax time. Check for this.

If you were paying into a retirement savings plan with your employer make sure you understand what this new job means for that old plan. Know your rights and obligations. Do the research.

Have Your First Job?

Having that first job is exciting. My teen’s first job was at her high school helping after school with a fellow student who needed supports in place at the end of her school day. Since every ; this receives a basic tax credit of $11,000, my teen was not required to fill out a tax form but here are the reasons she will.

Many first tax returns have to be submitted in paper. It allows the government to set the first time filer up on the CRA system, this also allows you to file online in the future if you qualify. The younger you do this first return as well sets the timeline for when your RRSP contributions begin.

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Starting college or university, or are you there and you haven’t filed your first return yet?

First, your tax return is used to determine if you are eligible for things like GST and the Ontario Trillium Benefit here in Ontario. Even if you have zero income, you can qualify for these payments.

As well to use your tuition, education and text book credit you have to submit them on your tax return in the year they occur even if you are not going to use the credit till the future.

There are several credits that you are intitled to as a student that you can save or transfer to a parent. The tuition amount can either be claimed by a student be transferred or carried over toward a future year.

With so many questions and because life can change on a dime, filing using TurboTax Canada makes sense. Every step of the way you are asked questions that enable you to get the best return. We love how fast and easy it is as well.

If you would like to win one of 5 copies of TurboTax Canada here on my blog, simply, leave a comment on this post, or you can join us for the #CDNmoney chat on Tuesday, March 28th at 7 pm ET as we talk about new parents and tax returns. There will be more chances to win that night as well.

Want more tax tips ready the TurboTax Canada blog and follow them on Twitter.

*Blog Giveaway ends March 27th at 11:59 pm and is only open to Canadian tax filers. This post has been sponsored by TurboTaxCanada, but as always my opinion is mine. 

 

 

Life, Death, Taxes and Your RRSP

Life, Death, Taxes and RRSP

In the past few years, there have been deaths of my friends, co-workers, fellow bloggers and their mates. All were under the age of 50. All left their families ill prepared for their untimely deaths. Most did not have wills. Most had not planned their estates; many left behind young children without a parent or a financial plan in case something happened. In this month, where we celebrate love, one of the most loving things you can do is plan for your death. Having an estate plan is one of the most loving acts you can do for your family. Yes, it is a difficult conversation to have. It is an essential one if you do not want to leave a mess for those you love.

Last week, I had a great conversation with Christine Van Cauwenberghe, Vice-President, Tax and Estate Planning at Investors Group. We had a great conversation about life, death and estate planning.

Estate Needs Analysis

Many Canadians do not want to think about death. I know it is a conversation I dread. The first step to being prepared for it though is to have an estate needs analysis done. If you have small children, it’s essential. Meet with a financial advisor who can help you develop a plan.

Your estate plan is simply a part of your financial plan. Do you want your estate to have enough money to cover day-to-day expenses if you are not there? Do you want to pass on a legacy to your children? These are just a couple of things to think about as you plan your life and death.

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Naming the Beneficiary

In my conversation with Christine, one of the things she emphasized was to never have minor children named on any insurance plans or RRSPs as the beneficiary. It is better to name the estate and to have an executor in place to take care of the financial needs of the children.

Her suggestion was never to name a young person under the age of 30 as a direct beneficiary. There are several reasons for this. If you die without a will in place and have left your kids as beneficiary, the money they inherit is held by the government for the children until they reach the age of eighteen. If you need to feed them, clothe them etc., you have to apply to the court for access. Really, if you do not have a plan in place, you are leaving a mess for your spouse and are not able to provide care for your children in ways that you may want too.

Minimizing the Tax Hit

Death, taxes and probate fees go hand in hand. Have your will written in such a way that unregistered investments, such as real estate, will pass outright to your spouse or you can use the principal residence exemption to eliminate the capital gains tax.

Have your estate administrator consider, whether it is in your family’s best interest, if an additional spousal RRSP contribution in the year of your death might help lower taxes. While speaking with Christine Van Cauwenberghe, Vice-President, Tax and Estate Planning at Investors Group she said, “Ensure that all possible tax deductions, such as medical expenses and donations are also included in the final tax return.”

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Gifts and Family Disputes

Some people try to avoid taxes or simply because they want to see their loved ones enjoying a certain item, will choose to gift an item before death. This is generally not recommended, but if you do decide to give one child part of their inheritance before you die, you will want to somehow equalize your estate through your will to ensure all are being treated equally to ensure there are no disputes.

There are so many things to think about when creating an estate and a financial plan which is why it is best to include an expert in the conversation. Investors Group has experts in tax and estate planning and I know I am now better prepared after my conversation with Christine.

A comprehensive plan really does look at all aspects of your life. It is best to be prepared for life, retirement and even death. Have you designed a plan for your life yet? Check out the Investors Group site to learn how you can be better prepared with a comprehensive plan. It really is more than just thinking about RRSPs.

Tax Trends that Will Effect You in 2017

Taxes

It is that time of the year again! It is January, and if you have been a reader of Common Cents Mom you know I start talking taxes in January to give you plenty of time to prepare. Again this year, I will be doing my own taxes and have once again agreed to partner with TurboTax Canada to bring you tax tips all tax season long. So what do you need to watch for in 2017?

This year Canadians are faced with a number of changes. Four of the child tax credits parents loved are gone. The tax credit for income splitting has changed dramatically and is now capped at $2,000. The good news is there have also been changes to Employment Insurance and the child tax benefit that are helping many Canadian families.

According to a recent TurboTax national survey, most Canadians are optimistic about their taxes and two-thirds do expect to receive a refund. More than half of Canadians will do their own taxes this year. With that said, it is really easy when using TurboTax.  I have used TurboTax for the past few years and have found it gets me all the money I deserve by automatically checking over 400 potential deductions and credits every year. This means I always get what I deserve guaranteed. You can read more about the guarantees here.

Are you an early bird when it comes to filing your taxes? It seems most Canadians- that is eighty percent file as soon as they have their paperwork ready. Over half of Canadians, say they will file in March but now is the time to prepare.

Did you know many Canadians aren’t taking advantage of all the tax deductions and credits as they should be? Now is the time to make sure you have these documents ready.

  • Only 44% of Canadians will claim medical expenses. Get your receipts in order, you can even ask your pharmacist for a copy of your receipts for the year.
  • Only 40% of Canadians with claim Charitable donations. Any time you give more than $20 to a charity get a receipt as it is a tax deduction.
  • Only 11% plan to claim rental receipts. Every year this helps my return soar here in Ontario.
  • Only 7% claim child care expenses. Save your receipts and have your care giver give the proper receipts.

Now is the time to get ready so you can get the best refund possible. Want to learn more ab0ut getting ready for this year’s tax season. Check out the tax tips section on the TurboTax website. It is filled with great tips that will help you get the best return possible. Also, remember to follow my blog and social this tax season as I bring you more information and tips. I also enjoy checking out the TurboTax blog all season long.

Let me know if you are expecting a refund this year and how you will spend it in the comments. I will be giving away 5 downloadable  TurboTax codes that will see you doing your taxes for free.

 

*Giveaway ends February 28th, 2017 and is open only to Canadian tax filers. 

Talking Freelancing & Taxes with TurboTax Canada #CDNmoney

It is the time of the year, as the snow melts everyone is getting ready to file their taxes. If you are self employed like me, this time of year might scare you a little. I know it does me. This year I have partnered again with TurboTax Canada to bring my readers and those that participate in the #CDNmoney chats on Tuesdays the latest information when it comes to taxes.

This Tuesday night, March 29th is our first chat and we are talking with freelancers about taxes. One of the things I do love about using the TurboTax software is that it is so easy to use. It provides the self employed blogger like me extra guidance as we walk through things like self employment income and deductions. It helps you file your personal and unincorporated business taxes together.

When it comes to all those deductions we can claim there are clear paths to claiming old space, travel expenses and vehicle expenses. If there is an expense you can claim this software knows about it.

Even if you run into an issue I love that there is free tech support. What are some of my top tips for my fellow freelancers?

1. Save ALL your receipts and invoices.

The government requires that you provide receipts and invoices. If you are audited you need to be able to back up your claims. No guess work allowed.

2. Set a budget for taxes.

Unlike salaried employees, you are not paying deductions for things like income tax, CPP or EI. You need to contribute the employee portion of these which can prove costly. A good standard to go by 30% of your income.

3. Contribute to your RRSP.

Freelancers can not rely on the company retirement plan. They need to have a retirement plan of their own.

4. Home Office Deduction

Be careful with this one, make sure your deduction is reasonable. If your office space takes up 20% of your housing space then that is what you claim. Some of the extra things you can claim internet, phone, home insurance, heat and hydro.

Are you a Freelancer-

Now, if you are like me you always have questions when it comes to tax time, so I am hoping over the next month as we talk taxes with my friends at TurboTax for the #CDNmoney chat each week you will join the conversations.

You can even win tax software! Each week, TurboTax will be giving away 4 downloads of their software, that will definitely come in handy as you get ready to file yours. This week 4 people will win a copy of the Home & Business edition.

Hope to see you tweeting with us this Tuesday March 29th at 7pm EST. No RSVP required!

Want more advice for Freelancers from TurboTax check out this page.

Last Minute Tips for Canadian Tax Filers

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It is that time of the year; tax season is in full force, and there are just 10 days left to file your 2014 tax return. Now many Canadians will of left it to till this week, in fact, way too many files late and some do not even file and lose out on thousands of dollars that could have been theirs. So if you haven’t started your return now this is the week to get it down, and I have a few tips for those of you who are just getting around to it.

Make sure you have declared all your income.

So many people forget little projects especially if they are freelancers. It is so important not to forget as you can be audited. So remember, collect that old T4s, the stubs from that side project.

Collect your receipts

So many people when they are in a rush as the tax deadline approaches forget some things that could have them getting money back like transit receipts, rental receipts, kids’ lessons, and if you have a small side business your business expenses.

Be aware of Changes that have come about this year as well.

The 2014 tax year saw some big changes like the Family Tax Cut, the doubling of the Fitness Tax Credit and the increase to the Universal Child Care Benefit. You can read more about what the tax changes mean for Canadian families here.

Remember even if you have a low income, file.

There are many reasons to file even if you had very little income and paid no income tax. There are tax credits you may be entitled to like GST. For those with very simple returns, you can even file them for free with TurboTax.

One of the simple ways to ensure you don’t miss a thing, is by using a Tax software like TurboTax. It asks you all the right questions at the right times. It also offers services like TurboTax Live Tax Advice, which allows you to get answers from a real person as you do the work. After you are done doing the heavy lifting (filing) you can always have a pro take a look at your return as well with TurboTax’s Pro Review service, that way you can rest well knowing all is correct with your return.

If you haven’t filed yet, you can also win the tax software, TurboTax by following them on Twitter this week and next. They are giving away a couple of codes to their online service. Their twitter handle is @TurbotaxCanada.

 

 

 

 

What the Tax Changes Mean for Canadian Families

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As you are getting ready to do your taxes this year,  you may be wondering what the changes made just before Christmas will mean for you. (At least I am hoping you know that there are several changes that will affect Canadian families.)

I am hoping that you already know about the Family Tax Cut, the elimination of the end of year child tax credit amount, the enhancements of the Universal Child Care Benefit (UCCB) benefits, the increase in the children’s fitness tax credit, and how the child care expenses deduction has increased; but if not, here’s a little primer for you.

The Family Tax Cut

This is a limited form of income splitting.  It is a federal tax credit that allows a high income earning spouse to transfer up to $50,000 of taxable income to spouse in a lower tax bracket. This gives these families some tax relief up to a maximum of $2,000. This is not a universal credit, you do have to have a child under 18 to take advantage of this program, and you cannot be separated or be confined to a prison or similar institution. You must also both file your taxes and neither spouse can be bankrupt.

The Elimination of the End of Year Child Tax Credit Amount

As of the end of the 2015 tax year, the amount for children under the age of 18 that you get simply for having minor children will be eliminated. Even with the child amount gone, most families will still see more money thanks to the enhanced UCCB benefits.

Enhanced UCCB Benefits

Effective January 1st, 2015, the Universal Child Care Benefit increased from $100 to $160 per month for kids under the age of 6 and there is now a new benefit of $60 per month for kids age 6 to 17. You may be wondering why you haven’t seen any cheques yet? There haven’t been any cheques so far.  You will receive a retroactive payment in July, even though the enhancements have been in place since January.

Increase in Children’s Fitness Tax Credit

The government has doubled the children’s fitness tax credit for the 2014 tax year from $500 per child to $1000 per child. For the 2015 tax year and beyond, this will become a refundable tax credit.

Child Care  Deduction Increased

Effective as of 2015 the maximum dollar amount that you can claim for your child care expenses  have increased by $1,000. So that means if you have a child under 7 the new maximum deduction is now $8,000. If you have a child 7-16( or infirm child over 16) the maximum deduction. is now $5,000. The limit for disabled children is now $11,000.

 

Now if you are doing your own taxes with TurboTax they will help you through the changes. After all, the software walks you through everything asking you key questions along the way. So you really don’t need to worry about being up to date on knowing every single change as they have taken care of that for you. Another key feature of TurboTax is that if you need assistance, you can ask a question and get it answered in real time. They even double check everything so you can feel comfortable filing your return. While none of this will make taxes fun, hopefully using TurboTax and getting some more money back with the changes to the tax system will make it a little less painful.

 

Organizing for Your Tax Return

 

 organizing your tax files

With the start of the new year, it is time to start thinking about the tax man and filing your taxes. Yes, I know they are not due yet, but they soon will be. Now, is the time to start organizing for your tax return. Do you really want to be running around for a few days in April looking for all your stuff?

You simply want to get to get yourself organized and there are some very simple things you can do to ensure you are.

Gather Your ID

 Do you know where you SIN card is? I don’t carry mine in my wallet for security reasons but I do have a file where I keep our birth certificates and SIN cards. Have yours, and those of your family members all in one place.

Gather Your Income Statements

 Did you work a full time job? By the end of January you will get your T4, and you should also get forms from any income source you had. Even if you were in EI or welfare you will get one. Make sure you put these away as you need them come tax time and you don’t want to have to go searching. Trust me, one year I lost mine and it was a bit of a headache to get it replaced till after April 1st.

Gather Your Documents

 Did you work for yourself? Have your kids in lessons or camps, pay a daycare provider, take a course etc? Make sure you gather and store your documents. A simple few files in an accordion box works well come tax time. Self employed? make sure you gather all your expense receipts as well. Here in Ontario if you paid rent or bought a bus pass you will want to have those in your file folder as well.

Here is a simple list to remind you:

Income:

  • Any T4 slips (Employment income)
  • Employment insurance benefits (T4E)
  • Interest, dividends, mutual funds (T3, T5)
  • Tuition / education receipts (T2202A)
  • Universal Child Care Benefit (RC62)
  • Old Age Security and CPP benefits (T4A-OAS, T4AP)
  • Other pensions and annuities (T4A)
  • Social assistance payments (T5007)
  • Workers’ compensation benefits (T5007)
  • All other taxable benefits like a work vacation you won,or other prizes your employer writes off.

Receipts:

  • RRSP contribution slip
  • Support for a child, spouse or common-law partner
  • Professional or union dues
  • Tool expenses (Tradespersons)
  • Eligible Medical expenses
  • Transit pass receipts
  • Charitable donations
  • Political contributions
  • Child care expenses
  • Adoption expenses
  • Children’s arts and sports programs
  • Moving expenses for more then 30km if for work
  • Interest paid on student loans
  • Carrying charges and interest expenses
  • Office – in-home expenses
  • Exams for professional certification

 Other things you may need

  • Notice of Assessment/Reassessment
  • Canada Revenue Agency correspondence
  • Sale or deemed sale of stocks, bonds or real estate
  • Northern residents deductions
  • Rental income and expense records
  • Business, farm or fishing income/expenses
  • Automobile / Travel logbook and expenses
  • Disability Tax Credit Certificate
  • Declaration of Conditions of Employment (T2200)
  • Volunteer Firefighters certification

File them

Now that you have them gathered, file them. Set up folders for receipts, income, and the kid stuff. By taking your time now to get things done you will save yourself time and grief come tax time. My other advice file as early as you can.

Now, you won’t be able to forget to add any of these come tax time if you use a program like Turbo Tax as it is full of reminders as you do your taxes. Just have everything handy when you sit down to do your taxes.

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Follow these tips and getting your taxes done will be a breeze because you took the time now to get organized. If you want some more great tips you can check out the TurboTax Blog, it is full of great information.

*this is a sponsored post from TurboTax, I am one of their brand ambassadors this year. I do recieve compensation for my posts however as always my thoughts are my own. 

 

Tax tips for the Canadian Single Parent

Tax Tips for the Canadian Single Parent

Tax tips for the Canadian Single Parent

Being a parent is hard, being a single parent is even harder in many ways at at tax time, there is much to think about this year and every year. As a single parent there are many things to remember and there are certain things you need to sort out with an ex especially at tax time.

Fortunately, there are some tax benefits, that can definitely help single parents and I was given some great reminders this week when I had a phone interview with Cleo Hamel, senior tax analyst with H&R Block.

Eligible dependants: A single parent can claim $10,822 for the amount for an eligible dependant (sometimes referred to as equivalent to spouse) for one of their children as well as the $2,191 Child amount. The child must be supported by you and living with you to do this.

So that means if you have:

Joint custody: If there are two children and the parents share joint custody, then each parent can claim the equivalent to spouse amount for one child. But note if you pay child support, you cannot claim this credit. That makes the difference.

Child Tax Amount: In primary custody situations, you are the only parent allowed to claim the child tax amount. For joint custody, then you have to agree  which parent will claim this credit. If you can’t agree then no one will be able to claim it.

Child Tax Benefit: This benefit is calculated by your household income level so the amount you receive depends on your earnings. The rates and amounts vary by province.  In joint custody situations, the benefit is split. You could get it for the months the child lives with you, or it could be half sent to you and half to the other parent.

Child Support: If your agreement is dated after May 1, 1997 then child support payments are neither taxable nor deductible although you do need to report them on your tax return.

Child Activities: The Children’s Fitness Amount can be claimed by either parent but cannot exceed $500 in total per child. There is also a Children’s Arts Amount of up to $500 per child. So that is a total of $1000 that can be claimed per child.

Childcare: Childcare expenses can add up but you must have receipts from your daycare or babysitter. If you are paying a family member to look after your children, this can be claimed as long as they are 18 or over and provide a receipt with their SIN. They will also need to report this income on their tax return. As well if you are not the primary custodial parent, and only have your child say on weekends you will not be able to claim this.

Changing status:  Did you move in with someone this year? If you move in with the other parent of your child, you are considered common-law for tax purposes straight away. If you move in with someone else, you are only considered common-law after you have lived together for a year. You need to report the change to the Canada Revenue Agency using a RC65 Form. This will affect your ability to claim the equivalent to spouse amount as well as your Child Tax Benefit calculation. It is important to do this right away as you could end up having to pay them back money.

Claiming dependants: Once a child turns 18 (that month), they are no longer considered a dependent for tax purposes even if you continue to support them. That means kids like my daughter who turns 18 while she is still in high school, is not longer a dependent. For me and many parents, we will be dreading this day as it will have major tax implications. One thing to remember as your child turns 18, talk with your employer to change your tax withholding or you may end up having to pay the CRA. The only exception is infirm children.

*  Information has been provided by H&R Block (www.hrblock.ca).  I have been financially compensated; however,  I am not obliged to give a positive review.  I am sharing what I knew and learned via our conversation. 

Friday Freebie: Canadian Tax Software

Well it is that time of  year. We are starting to get T4’s and I was out shopping for tax software when I came across Studio Tax Enterprise on Frugal Shopper.

You can download it here. You can use it to file your first 20 returns.

When I think of taxes and having to file really I don’t want to have to pay more then I have to. From the reviews of some of my frugal friends this software makes it easy for us Canadians to efile for free. How great is that?