In the wake of escalating living costs and inflation, Canadians are feeling the financial squeeze. However, there's a silver lining to this fiscal strain: tax credits.
Leveraging these credits can alleviate financial burdens by redirecting extra money toward essential expenses and bill payments.
Here’s an overview on some lesser-known tax credits and deductions you can claim on your income tax return to bolster your savings this tax season.
Top government tax credits and deductions for the upcoming tax season:
While certain tax credits, like the GST/HST tax credit, are automatically applied based on your household income, others require manual application when filing your returns. Notably, credits like the Canada Child Benefit or the home office tax credit fall under this category.
Unearthing Unclaimed Credits
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The Caregiver Tax Credit: Caregivers tending to family members with mental or physical impairments may claim specific expenses. Eligibility hinges on proving caregiving status for certain relatives, potentially ranging from $2,350 to $7,525 per dependent.
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Home Office Tax Credit: With the rise of remote work, claiming expenses like increased power or internet usage, along with designated home office space and certain office supplies, can be game-changers.
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Moving Expenses Deduction: Whether relocating for work or personal reasons, certain expenses like truck rentals, fuel, and storage can be deducted from your income tax return.
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Capital Loss Tax Deduction: Amidst market volatility, Canadians facing investment losses in the year can offset these against other capital gains. While it can't directly deduct income tax liability, it significantly reduces capital gains tax liability.
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GST/HST Tax Credit: Automatically disbursed quarterly, this credit depends on your reported income from the previous tax year.
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Canada Child Benefit (CCB): This monthly support for guardians of children under 18 varies based on income, living situation, and the number of dependents. It's an invaluable resource that can be further supplemented by provincial child tax credits.
Transferring credits and seeking expertise
Moreover, transferring unused tax credits to a spouse or partner, if your tax liability is already at $0, could be a strategic move for their tax reduction.
Unclaimed opportunities
Despite the availability of these benefits, many go unclaimed. Shockingly, over $1.4 billion worth of Canadian tax refunds remained unclaimed as of August 2022.
Expert assistance for maximizing savings
Navigating these intricacies can be daunting. If uncertain about your eligibility for specific tax credits, seeking professional help, like hiring an accountant, might yield substantial returns compared to potential upfront costs.
As the tax season looms, consider these often-overlooked tax credits and deductions as potent tools to alleviate financial burdens and secure a stronger financial future.
