Tax tips for students

A chartered accountant and the Canadian Revenue Agency offer tips for students on how to tackle their taxes this season.

Tax season is upon us, and for many this is a stressful time of year. Students are finishing up classes for the semester and are getting ready to take exams. Unfortunately for students, tax season waits for no one. The deadline for individuals filing a tax return this year is April 30.

Many students don’t file their own tax return, with some handing things over to their parents and others to the professionals. But for the eager and strong-hearted who want to tackle this alone, here are a few tips.

What you need

The Canada Revenue Agency (CRA) As a student filing a tax return, you will need to provide certain documents, such as a T4 slip. These slips show employment income and payroll deductions.

It is important to keep all documentation when filing for a tax return for at least six years. Your return may be selected for review, therefore you should keep an organized file of all of your documents.

You will need to have information on all of your income.

According to CRA the most common types of student income are:

  • Employment income
  • Tips and occasional earnings
  • Scholarships, fellowships, bursaries, and study grants (some of these may be excluded)

Michael Casey, a chartered accountant and chartered business valuator in Halifax, says “students should make sure they check carefully to see if scholarships are tax exempt because most are.”

Casey says students need to claim their tuition and book expenses. In order to claim your tuition, education and textbook amounts, you need to receive your T2202A form. This is usually available online. If you have not received this you will need to contact your school.

For textbooks, full-time students can claim $65 a month and part-time students can claim $20 a month.

Some things eligible tuition fees do not include are:

  • Social activities
  • Medical expenses
  • Transportation and parking

As stated by CRA, one important thing to remember is courses taken as academic upgrading in order to attend certain university or college programs, may not be claimed towards the tuition tax credit because they are not considered a part of post-secondary education.

Once you have calculated the amount you will need to reduce your own tax owing, if there is any remaining amount, you may choose to transfer it to a parent of grandparent.  You can transfer an amount equal to $5,000 minus the amount you used to reduce your own tax payable. All the student needs to do is sign the tax certificate and provide a copy to the recipient.

Casey says you can earn up to about $10,000 tax free, but you should still file.

“The T4 income, such as wages, earns you the potential for a future RRSP deduction when you begin to work and earn the big bucks,” he says.

“If you are 19, you will get the HST rebate which is received 4 times a year tax free. If you don’t file, you are out of luck.”