6 Tips to Maximize the Savings on Your Return this Tax Season

6 Tips for Taxes

6 Tips to Maximize the Savings on Your Return this Tax Season

6 Tips for Taxes

A new year brings new possibilities, new experiences, and… a new tax season! For many Canadians, tax time can take a big bite out of their wallets every year. Plus, with inflation and the cost of living skyrocketing, Canadians could use a little extra cash in their pockets now more than ever. So, when you are filing your taxes this season, ask yourself, are you leaving money on the table? With a wealth of tax credits and deductions available, claiming these government savings could help you hang on to more of your hard-earned money.

What is the difference between a tax credit versus a tax deduction?
A tax credit is a sum of money that reduces the tax you owe, giving you a dollar-for-dollar reduction of your tax liability. Simply put, tax credits act like a discount on your overall tax bill. So, if you receive a $1,000 tax credit, your tax bill will be lowered by the corresponding amount. There are two types of tax credits – refundable and non-refundable. Both lower the amount of taxes owed, but a refundable tax credit can result in you getting a tax refund, whereas a non-refundable tax credit may bring your tax bill to zero but will stop short of issuing a refund.

A tax deduction, on the other hand, reduces the amount of your income subject to taxes. These deductions lower your taxable income by the percentage of your highest federal income tax bracket.

So rather than filing your taxes fast and furiously this year, remember that slow and steady wins the race. By exploring the plethora of tax credits and deductions available, you could discover financial choices that could help you save more of your hard-earned cash.

Here are a few government tax credits and deductions you could benefit from to maximize your return this tax season:

1. Make “work-from-home” work for your finances
Since the global pandemic first forced millions of Canadians to work remotely, working from home has become commonplace today. While working from home enables you to avoid the costs of a daily commute to the office, it still comes with a price tag. From heightened electrical usage to fuel your at-home workstation to buying furniture for your home office, the price of working from home can quickly add up. But there is good news! With the Home Office Tax Credit, any Canadian who worked from home for more than 50% of the last year for at least four consecutive weeks can claim up to $500 off their work-from-home office expenses on their tax return. Did you splurge on a new chair or laptop stand? The home office tax credit could help you recoup some of those costs!

2. Recover some of your childcare expenses
Having a child is an exciting time that brings new memories for you and your family to share – but also the financial responsibility of caring for your bundle of joy. Childcare has swiftly become one of the most substantial household expenses for Canadian families – making opportunities for financial savings more attractive than ever. Did you pay a caregiver to look after your little one or send them to day camp? Remember to keep track of these receipts! From daycare to summer camps and caregivers, with the Child Care Expenses’ deduction, you can claim these costs for any child living with you under 16 years old. Moreover, by claiming childcare expenses, you can reduce your taxable income and increase your chances of receiving a refund. That’s a win-win!

3. Let your heartfelt donations give back to you
If you donated money to a charitable cause last year, you could have some good karma coming your way – but remember to save those receipts! With a charitable donation, you not only get the joy of making a difference, but your generosity can also work for you thanks to the Charitable Donation Tax Credit. With this tax credit, if you donated to a charity before December 31 of this tax year, you could claim eligible philanthropic contributions of up to 75% of your annual net income. If you are passionate about raising awareness for diabetes and made a financial contribution to Diabetes Canada last year, you could recoup a percentage of your charitable giving when filing your taxes. Simply put, sometimes generosity pays off!

4. Take advantage of the First-Time Home Buyers Credit
Attention all home buyers! Did you become a homeowner in 2022? Congrats! We all know that purchasing your first home is no small feat, but you can lighten the financial load of homeownership with another nifty tax credit – the First-Time Home Buyers Credit. One catch, you must be a first-time home buyer to take advantage of this credit. The home buyers’ tax credit is a non-refundable tax credit that allows first-time home buyers to receive a credit of up to $10,000 of their home purchase. While $10,000 may not be a life-changing sum, it can help ease the financial pressure of being a homeowner.

5. Have your digital news and read it too
Did you know you could get a tax credit for supporting Canadian journalism? If you subscribed to a recognized Canadian news publication last year, you can claim up to $500 with the Digital News Subscription Tax Credit. As long as the subscription is in your name and provides access to predominantly written digital content, you could be eligible for this benefit. And if more than one person happens to be listed as a subscriber, the credit can be shared! The full list of eligible news organizations is available on the CRA’s website here.

6. Submit your training costs
Did you recently go back to school to complete a course or take a recognized licensing exam? You may be eligible to recover those costs through the new Canada Training Credit. If you are between the ages of 26 and 66, are working, and are making between $10K – $150K, you could claim the Canada Training Credit for tuition, exam fees and other associated fees for courses that you took in the previous year at an eligible educational institution. However, you are out of luck if these costs have already been covered by your employer or a government training program.

If filing your taxes feels daunting and you need guidance on what tax credits or benefits you could be eligible for, Curt Reimer, Branch Manager of Valley First, a division of First West Credit Union, recommends finding a tax professional to work with – someone that you can build a partnership with. On the flip side, if you have a relatively straight-forward tax return and are comfortable navigating it on your own, he recommends doing some research into the different deductions that are available and making purchasing decisions throughout the year that take them into account.

Boost your savings this tax season with the help of a credit union… become a credit union member. Credit unions are a great financial option to help you manage and feel confident about your finances during tax season and all year round. Not yet a credit union member? Find your nearest credit union here.