Originally Posted by knox

Anyone know anything about claiming text books? In the Mountain News it said you could get as much as 65$/month.

Yes, you do get a certain amount back, but I'm not entirely sure what the amount is (percentage-wise).

The textbook amount comes from the T2202A you get from McMaster. In addition to entering the amount of eligible tuition you paid, there is a spot on your return to enter the number of months of full-time study, and the number of months of part-time study.

The textbook amount works like this:

1. Multiply $65 by the number of full time months.
2. Multiply $20 by the number of part time months.
3. Add lines one and two together. Multiply the result by 15%. *

* The Tuition, Education, and Textbook amounts are non-refundable tax credits, 15% of which is deducted from your income tax payable (or added to your refund receivable).

For the sake of interest, you also get an education amount. The calculation is the same as above, but with $400 per full time month, and $120 per part time month.

So, the T2202A actually gives you three credits: Tuition Paid, Education Amount, and Textbook Amount.

Be very careful with your rent receipts. I was living on my own while finishing highschool and got notice in the mail of a reassessment of my 2008 taxes. I filed with HnR after the deadline for tax season because I knew I would be getting a return and procrastinated to do so earlier. With that said, I didn't have rent receipts at the time of filing, and did not receive the original letter stating I was being reassessed. Since that letter, I received a letter stating all this interest would be accumulated and called CRA and apparently I cannot dispute the interest charges because once I submit receipts I am not responsible for paying them anything. I was however told that since they perform many audits this time of year they will hold my 2009 return if it is not resolved before then, and it could take up to 3 months to get resolved (I had submitted receipts in December of 2009, and the original letter about my audit was sent in August).

I'd strongly suggest not screwing around with your taxes at all. You could be put in a worse situation like me, who attended post-secondary school in January of 09 and completed one year, and with that said my largest return yet could be held/decreased should they not find my receipts good enough. I since have moved and went to a different city to contact my landlord in attempts to get rent receipts. It's something that I wish I could of avoided all together.

To the person who said their parent works for CRA, I was informed by a friend that they more commonly audit those who file taxes late, any word on if this is true or not? I was told by CRA when I called that audits are done quite commonly and the first thing that flags their attention is rental claims, although I have friends who have claimed rent for years and have not needed to provide a receipt once.

Another point regarding the Ontario Tenant Tax Credit: past a certain level of income, you no longer qualify for it, so it's better to just leave it off your return entirely. I just ran through my return last night, and I don't qualify for this credit. I'm going to just leave it off my return entirely... No point in claiming something they can dispute when I won't get anything out of it.

Edit: Also, I believe the maximum tax reduction for the Tenant Tax Credit is $250. So it should be a pretty easy decision between getting an extra $250, and not having the CRA all over your butt if you don't have proper documentation.

Does paying for residence qualify as paying rent for tax purposes?

It's a little different from paying rent. You don't get as much of a return compared to when you live off campus.

if one of your parents pay for your entire schooling, they can claim this stuff, right?

Originally Posted by jmjm

Does paying for residence qualify as paying rent for tax purposes?

If you lived in a University residence, you get a credit of $25, no matter how much you paid. The logic is that property taxes are not being paid on residences, and the real purpose of this credit is to provide relief from those property taxes.

Originally Posted by lawleypop

if one of your parents pay for your entire schooling, they can claim this stuff, right?

You can sign and give them part of your T2202A slip to allow them to claim part of the amount. You can only transfer up to around $5,000 (not exact) federally, and about the same provincially. The remainder becomes a non-refundable tax credit to you, which can be carried forward in future years. (Remember that the remainder is not just the small amount of tuition paid above $5,000, but also the Education amount, and Textbook Amount, as noted above).

**Exception: If you are in a position where you have to pay ANY taxes for the year (not just an amount in excess of what you have already paid), you have to apply your Tuition, Education, and Textbook amounts to your income first, until you are left paying zero taxes. If there is an amount left over, you can then transfer it to your parents. My dad was super pissed when he found this out!

Originally Posted by sniderj

If you lived in a University residence, you get a credit of $25, no matter how much you paid. The logic is that property taxes are not being paid on residences, and the real purpose of this credit is to provide relief from those property taxes.



You can sign and give them part of your T2202A slip to allow them to claim part of the amount. You can only transfer up to around $5,000 (not exact) federally, and about the same provincially. The remainder becomes a non-refundable tax credit to you, which can be carried forward in future years. (Remember that the remainder is not just the small amount of tuition paid above $5,000, but also the Education amount, and Textbook Amount, as noted above).

**Exception: If you are in a position where you have to pay ANY taxes for the year (not just an amount in excess of what you have already paid), you have to apply your Tuition, Education, and Textbook amounts to your income first, until you are left paying zero taxes. If there is an amount left over, you can then transfer it to your parents. My dad was super pissed when he found this out!

...
Can you explain this to me like I'm 5? XD

I dont know about the residence thing sorry but with regard to tuition. You are able to pass along $5000 federally and provincially to your parents. You just have to fill out and sign the second page of the form and give it to your parents to file in their taxes. The remainder of your tuition credit can not be transferred but you carry it forward into future tax years.

Even if you have to pay taxes, which would be surprising as a student, its a smart idea transfer it to your parents because they would most likely be in a higher tax bracket then you and therefore would save more money then you would. just ask for the savings you missed out on back.

I am not sure about this, but i did read somewhere that only one person per house is allowed to claim their rent receipts, I have no idea if this is true and would like to know the answer myself. I know three people in my house got audited last year.

Originally Posted by JeffB

I dont know about the residence thing sorry but with regard to tuition. You are able to pass along $5000 federally and provincially to your parents. You just have to fill out and sign the second page of the form and give it to your parents to file in their taxes. The remainder of your tuition credit can not be transferred but you carry it forward into future tax years.

Even if you have to pay taxes, which would be surprising as a student, its a smart idea transfer it to your parents because they would most likely be in a higher tax bracket then you and therefore would save more money then you would. just ask for the savings you missed out on back.

I am not sure about this, but i did read somewhere that only one person per house is allowed to claim their rent receipts, I have no idea if this is true and would like to know the answer myself. I know three people in my house got audited last year.

First, like I said, you can't transfer any portion of your Tuition, Education, and Textbook Amounts until you have completely offset your own taxes. It doesn't matter that your parents are in a higher tax bracket though, because a non-refundable tax credit is applied at the same rate no matter what tax bracket. If you paid $1,000 in tuition, you get a $150 credit (15%) against taxes payable (or addition to refund receivable), regardless of your marginal tax rate.

There ARE some things which are better to have applied to a higher income person, as they affect your Taxable Income, and therefore are credited at your marginal tax rate. Usually, though, the government has placed a rule saying that these things need to be applied to the lower income earner in the family.

Lawleypop: I will respond in some detail a little later. I'm at work, and probably shouldn't be replying at all... and the response to your question will take a bit of typing!

Originally Posted by JeffB

I dont know about the residence thing sorry but with regard to tuition. You are able to pass along $5000 federally and provincially to your parents. You just have to fill out and sign the second page of the form and give it to your parents to file in their taxes. The remainder of your tuition credit can not be transferred but you carry it forward into future tax years.

Even if you have to pay taxes, which would be surprising as a student, its a smart idea transfer it to your parents because they would most likely be in a higher tax bracket then you and therefore would save more money then you would. just ask for the savings you missed out on back.

I am not sure about this, but i did read somewhere that only one person per house is allowed to claim their rent receipts, I have no idea if this is true and would like to know the answer myself. I know three people in my house got audited last year.

Only one person can claim the rent if the receipt is in the amount of the full rent. If you each got individual receipts dividing your rent into portions and not exceeding the full amount of rent that was actually paid you all can claim your rental expense. I hope that helps.

That does, Thanks a lot

Okay Lawleypop, back to your question regarding whether or not I can explain the transfer of Tuition, Education, and Textbook amounts to you like you were five... I think I can:

When you get paid, a certain amount is withheld from your paycheque for EI, CPP, and Income Tax. This amount is determined by assuming that your net income will be equal to the amount earned in this pay period, multiplied by the number of pay periods in the year. They then take the assumed annual income, determine the tax rate, and figure out the taxes.

Example (A common student case): You don't work during school, but get a summer job to make some extra money. Let's assume your summer job pays you on the 15th and last day of every month. This means there would be 24 TOTAL pay periods in the year (it doesn't matter that you're only getting paid for 4 months, or 8 pay periods). Let's also assume for simplicity that you get $1,000 in gross pay (before CPP, EI, and Income Tax deductions) for each paycheque. This means that you are going to make $8,000 this year. The government assumes that you are getting the $1,000 twice a month for the WHOLE year, so assumes that you are going to make $24,000 this year.

Now that the government has determined you are going to make $24,000 this year, they subtract the basic personal tax credit ($10,320 for 2009), and determine the difference ($12,680). They then apply the appropriate tax rate (15% for the sake of argument) to the difference calculated above to determine the total taxes for the year ($12,680 * 15% = $1,902). This is then divided by the number of pay periods to determine the tax to be deducted in this pay period ($1,902 / 24 = $79.25). Note: This is not the exact way it is done, but for illustrative purposes it works

So, the effect of this is that you have paid $79.25 in Income Taxes on each of the 8 paycheques you received this year, for a total of $634 in taxes.

Now, when you file your tax return, you claim a net income of $8,000. You then claim your Basic Personal Tax Credit, which is $10,320. Because the value of that credit is greater than the income you received, you are in a situation where you do not actually owe the government any money. You will get the full $634 back on your return.

Example 2: If you have a situation where, after determining your net income, and applying all credits to offset that income (not including the Tuition, Education, and Textbook Amounts), you are still in a position where you owe some taxes to the government for the year, you need to apply an appropriate amount of your Tuition, Education, and Textbook amounts on your return. Remember that "owing taxes" does not necessarily mean you are not getting a refund. You could get a refund of $500, meaning you paid $634 in taxes, but really you should have only paid $134, so the difference is the refund. In this situation, you still "owe" the government $134 for the year. (I can't think of a better word than owe... I have a feeling this is going to confuse people).

So if you had the $134 of taxes on your income as mentioned above, you would have to bring this to 0 before you can transfer anything to your parents. Because Tuition, Education, and Textbook Amounts are non-refundable tax credits, they reduce your tax owing at a rate of 15% per dollar. So if you paid $5,000 in tuition, you can reduce your taxes by a total of $750. You need to get rid of your $134, so you use (134 / 0.15 = ) $893 worth of your tuition amounts on your own return to make it so you owe no tax for 2009 (and now you get a refund of $634 as above). You can transfer the remainder ($5,000 - 893 = 4,107) to your parents.



Okay, so I know I'm never going to be a teacher... this is REALLY difficult to explain in text. I tried...

Haha, I think I get it. XD Thanks a lot.

(Btw, how do you know this stuff? I feel like I should educate myself)