10 Tax Tips to Reduce Your Taxes in Canada

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With inflation hitting near record highs, many people have cut back on their spending. With tax season now upon us, many people are looking for tax tips to put money back in their pockets. Here are some tips and tricks to help you get your biggest possible refund:

Know your tax deadlines

Knowing your tax deadlines can help you save since the Canada Revenue Agency (CRA) will charge you penalties if you file late and owe money. More importantly, filing early means you’ll get your refund earlier, so that’s cash back in your pocket. The most important dates are as follows:

  • April 30 is usually the tax filing deadline for individuals. However, if that falls on a weekend, the date moves to the next Monday. This year, the tax deadline is May 1.
  • If you’re self-employed, your tax filing date for 2023 is June 15. However, if you owe money, it must be paid by April 30, 2023.
  • The electronic tax-filing service that sends your income tax and benefit return directly to the CRA: NETFILE, opened on February 20 for 2023, so that was the first day you could file your return.

Have your documents in order

Filing your taxes is easy if you have your documents in order. Some of the most common documents you’ll want to make sure you have, include:

  • T4 – Statement of Remuneration Paid (employment income)
  • T4A – Statement of Pension, Retirement, Annuity, and Other Income
  • T5 – Statement of Investment Income
  • Registered Retirement Savings Plan (RRSP) contribution receipt
  • Charitable donations
  • Childcare expenses
  • Medical expenses
  • Staycation credit
  • Multi-generational home renovation tax credit
  • US W-2 – Foreign Income

You would also need to have personal information handy such as your Social Insurance Number (SIN), spouse and/or child’s net income, last year’s tax return, and any documents from the CRA.

Since you might be dealing with many documents, you’ll want to start a folder – physical or digital – to keep everything organized throughout the year. TurboTax also has a helpful guide and document checklist to help you understand everything you’ll need to have handy when you file your taxes.

Contribute to your Registered Retirement Savings Plan

For every dollar you contribute to your Registered Retirement Savings Plan (RRSP), your taxable income is reduced by an equal amount (your net income is also impacted and can affect your eligibility for provincial and federal credits). For example, if you earned $50,000 last year and you contributed $5,000 to your RRSP, your taxable income for the year would only be $45,000. This is one of the best tax tips since there’s usually no better way to lower your taxes while saving for your future. For context, I started contributing to my RRSP as soon as I started working, and I have seen my portfolio grow significantly over the past two decades.

Claim the work-from-home tax credit

The work-from-home tax credit was introduced a few years back, and it’s still available. The flat rate method – where no receipts are required – allows you to claim $2 for each day, up to 250 days. That means you can claim a total of $500 in work-from-home expenses. It is possible to claim a higher amount, but you would need your employer to fill out form T2200S or T2200. In addition, you would need to keep all of your receipts, so plan to add these to the same folder as your other tax documents to ensure you have everything in one place!

There are many tax credits, deductions, and deadlines that many people aren’t aware of. I partnered with TurboTax and asked people on the street some tax questions. See how they did now.

Use a tax solution like TurboTax

TurboTax can help you get your biggest refund since it automatically searches more than 400 credits and deductions, so you get every dollar back. It also offers a wide range of innovative tax solutions to help you file your taxes with confidence, whether you do your taxes by yourself or get expert help:

  • For investors, TurboTax Premier makes it easy to get your taxes done right no matter what kind of investment you have, including stocks, crypto or rental properties.
  • Small business owners, freelancers, or those with a side hustle will benefit from TurboTax Self-Employed, which searches for industry-specific deductions personalized to you and your line of work, so you can keep more of your hard-earned money in your pocket at tax time.
  • If you want to file your taxes by yourself, without being on your own, you can use TurboTax Assist & Review. You can get unlimited tax advice and file with confidence knowing an expert has reviewed your return. 
  • TurboTax Live Full Service makes it easy to sit down from the comfort and privacy of your home and meet with an expert while they do your taxes for you. You’ll get matched with the best expert for your unique tax situation. If you have all of your documents ready, an expert can get your taxes done right, in as little as a day.

File even if you have low/no income

Many people assume that filing their taxes is not required if they have no or a low income. Even though you likely won’t owe any taxes, you still need to file every year since it’ll give you access to benefits and credits such as:

  • Goods and services tax/harmonized sales tax (GST/HST) credit
  • Climate action incentive payment
  • Provincial and territorial benefits and credits
  • Canada child benefit (CCB)
  • Canada Housing Benefit Top-Up (must be applied for by March 31st)

In addition, even if you’ve earned just a minimal amount in the previous year, you would still earn RRSP contribution room when you file your taxes.

Child care is more than daycare

Many parents know that daycare and nursery schools count as child care expenses, but other types of child care can be tax-deductible too. This would include nannies, day camps, overnight camps, and sports schools. You would just need a formal receipt to make a claim. Private schools can also be deductible for children in Kindergarten as they’re not required to attend school until Grade 1.The school will issue a receipt detailing the amount eligible for child care.

Medical expenses can be claimed

There are more than 100 medical expenses that you can claim on your taxes. This would include things such as medical devices or out-of-pocket expenses you paid to a medical practitioner. For example, when my wife and I went through IVF to have our child, we spent more than $10,000 in medical expenses. Once our doctor provided us with an itemized receipt, we were able to claim our expenses, which helped reduce our tax burden for the year.

Self-employment expenses can offset your income

If you have any self-employment income (even if you have a full-time job), some of your business expenses can be claimed on your taxes. Some business expenses that self-employed individuals can claim include:

  • Office supplies
  • Bank fees
  • Rent/mortgage payments
  • Utilities
  • Advertising
  • Cell phone and internet charges

Generally speaking, if an expense is related to your business, you can likely claim it (or a portion of it) on your taxes. For example, let’s say you use your home internet 50% of the time for business-related purposes. That means you could claim 50% of your internet bill as a business expense.

Filing doesn’t have to be expensive

TurboTax is free for Canadians 25 or under until May 1, 2023* (subject to change). Even for those of us aged 25+, they too can access a real tax expert and, in one meeting, have their taxes prepared, signed and filed for an affordable price with TurboTax Live Full Service.

Ultimately, no matter what option you choose, TurboTax has a solution for everyone and their individual tax situation. Their team of experts can help you find every tax deduction you deserve, and double-check your tax return to help make sure it’s right.

Final thoughts

While knowing all of the above is great, no one is expecting you to know everything. When using TurboTax, you’ll have a team of experts that can help you search for the tax credits and deductions that are relevant to you, so you can maximize your return.

**For tax year 2022 products only. Filing must be completed by March 31, 2023 for Full Service and Assist & Review; May 1, 2023 for TurboTax Online. Age is determined as of December 31, 2022. If filing a spousal return, both spouses must be 25 or under as of December 31, 2022. Excludes Premium Pack.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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