Difference between revisions of "How Can I Save on My Taxes?"

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{{DEMOWARNING}}
'''''Paying Taxes in BC''''' from [[People's Law School]] has been replaced by [https://www.peopleslawschool.ca/publications/essentials-money-debt/ ''Essentials of Money & Debt'']. This new title covers income tax as well as other aspects of managing your finances and dealing with debt-related problems.
{{Paying Taxes in BC TOC}}
==Claim your deductions==
 
People with higher incomes pay more in income tax. There are expenses you can deduct to reduce your income tax. When you <span class="noglossary">claim</span> a deduction, your taxable income is less.
 
Here are some examples of when you can <span class="noglossary">claim</span> a deduction on your income tax:
 
* I support my <span class="noglossary">spouse</span>.
* I support a family member who has a <span class="noglossary">disability</span>.
* I am a single <span class="noglossary">parent</span>.
* The other <span class="noglossary">parent</span> and I both work full-time and we have childcare expenses.
* I am a full-time student.
* I give money to a charity.
* I am a senior.
* I have a <span class="noglossary">disability</span>.
* I run a business out of my home.
* I had to move to be closer to my job.
* I have medical expenses not covered by my medical insurance.
 
To make sure you <span class="noglossary">claim</span> all your deductions, ask for help. Call your community centre, accountant, bookkeeper or tax preparer and see if anyone can help with an income tax return.
 
==Can I get some payments and credits from the government?==
 
Even if you have no income to report or tax to pay, you may be able to get some payments or ''credits'' from the government.
 
There are different kinds of payments and credits. The main ones are:
* Canada Child Tax Benefit (CCTB) payments,
* the Universal Child Care Benefit, and
* tax credits from the provincial government.
 
To get any of these payments or credits, you must file an income tax return.
 
===Canada Child Tax Benefit (CCTB)===
 
The Canada Child Tax Benefit (CCTB) is a tax-free monthly payment for families who need help with the cost of raising children under age 18.
 
[[File:Paying Taxes Receipt Image.jpg | right | frame | link=| <span style="font-size:60%;">Copyright www.shutterstock.com</span>]]
 
The amount you get depends on how much you make and how many children you have.
 
You should apply for the CCTB as soon as possible after your child is born or after you become a resident of Canada.
 
Even if you feel you will not get the CCTB because your income is too high, you should still apply. The government makes the payment based on your income for the previous year.
 
You will have to provide proof of birth with your application if benefits have not been paid for this child before and:
* your child was born outside of Canada, or
* your child was born in Canada but is more than a year old.
 
You apply for the CCTB by completing the form, Canada Child Benefit Application. For details, go the [http://www.cra-arc.gc.ca Canada Revenue Agency website].
 
You may have to fill out an additional form if:
* you and/or your spouse are not Canadian citizens,
* you and/or your spouse have become new Canadian citizens within the last 12 months, or
* you and/or your spouse have become residents of Canada within the last two years.
 
BC Family Bonus is a payment from the provincial government to help you with the cost of raising children if your income is low. The BC Family Bonus comes with the Canada Child Tax Benefit. You do not have to apply for it. The government decides if you qualify for it based on your income tax return.
 
===Universal Child Care Benefit===
 
The Universal Child Care Benefit is a payment for each child under the age of 6 years. This benefit is $100 per month per <span class="noglossary">child</span>. The government pays this benefit to ''all parents'' in Canada. You report it as income on income tax return. You should apply for this benefit as soon as possible after your child is born or after you become a resident of Canada. You apply for this benefit by completing the form, Canada Child Benefit Application. For details, go the [http://www.cra-arc.gc.ca Canada Revenue Agency website].
 
===Low Income Climate Action Tax Credit===
If your income is low, you may also be able to get the BC Low Income Climate Action Tax Credit. This is a payment to help you with the carbon tax you pay.
 
Lower-income families can get $105 per adult and $31.50 per child each year. On July 1, 2011, the credit increased by 10%.
 
You are considered to be “lower-income” if your income is $30,722 for a single person, or $35,843 for a family (2010-2011 figures).
 
==Are there ways to reduce taxable income?==
 
This section describes ways in which people put away money for their future. Get some advice from a financial advisor to see what choices would be best for you.
 
===Registered Retirement Savings Plan (RRSP)===
 
A ''Registered Retirement Savings Plan'' or RRSP allows you to delay some of your taxes. You can open a RRSP at a bank, credit union or investment company. You can contribute to your RRSP at any time during the year. You <span class="noglossary">claim</span> the amount of your RRSP contribution as deduction on your income tax return.
 
The amount you can contribute is shown on the ''Notice of Assessment'' you get from the government each year after you file your taxes. By the end of February of each year, your bank, credit union, or investment company will provide you with a receipt for your RRSP contributions in the previous year. You <span class="noglossary">claim</span> the amount as a deduction on your income tax return.
 
You do not have to <span class="noglossary">claim</span> your whole RRSP contribution each year on your taxes. You can ''defer'' some or all of your contributions. This can be helpful if you do not have enough income in that year to make the best use of the tax deduction.
 
You do not have to put the full amount in each year. If you do not pay the full amount, you will have unused contribution room for the future. This means you will be able to put more money into your RRSP later on.
{{FmboxPLS
| text      = If you are working part-time now, you may put less than your limit into your RRSP this year. Next year, if you work full time and have a higher income, you could put in more money.
}}
 
===Registered Education Savings Plan (RESP)===
 
Registered Education Savings Plan (RESP) is a special savings <span class="noglossary">account</span> that helps you save for post-secondary education. You can open a RESP at a bank, credit union or investment company. The government does not tax this money while it is in your RESP. It can grow tax free. When the money pays for education, the money is taxed in the student’s name. Since many students have little or no other income, they can usually withdraw the money tax-free.
 
===Tax Free Savings Account (TFSA) ===
 
The Tax Free Savings Account (TFSA) helps you save for your future. You can open a TFSA at a bank or credit union or investment company. You can contribute up to $5,000 annually to a Tax Free Savings Account.
* Any money you make in this <span class="noglossary">account</span> is tax-free.
* Any money you withdraw from this <span class="noglossary">account</span> is tax-free.
 
{{REVIEWED | reviewer = [[People's Law School]], 2011}}
 
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Latest revision as of 16:10, 5 May 2021

Paying Taxes in BC from People's Law School has been replaced by Essentials of Money & Debt. This new title covers income tax as well as other aspects of managing your finances and dealing with debt-related problems.

In law, a document demonstrating ownership of a thing. See "ownership."

A sum of money or an obligation owed by one person to another. A "debtor" is a person responsible for paying a debt; a "creditor" is the person to whom the debt is owed.

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