Were you looking to maximize your tax returns for 2023? To maximize your tax return in Canada, you must calculate and reduce your taxable income by utilizing every tax credit and deduction. A credit lessens the amount of taxes a person owes, while a deduction decreases the person’s taxable income.
This article will cover some of the basics you need to know about how taxes work in Canada. It will also provide a list of tips and tricks you can take advantage of to get your money back this tax season.
When is the Official Deadline for Tax Returns in Canada?
Doing all these complicated calculations or hiring income tax assessment experts will not make sense if you miss the deadline. That is why knowing the official tax return deadline is critical before calculating tax returns.
The official tax return deadline is May 1, 2023, which can extend to June 15, 2023. The extension, however, only applies to individuals who are self-employed or have a common-law partner or spouse who is self-employed.
Otherwise, all taxes a person owes must be paid to the Canada Revenue Agency or CRA by May 1, 2023.
What Tax Credits and Deductions Can People Utilize?
There are plenty of credits and deductions a person can use to their advantage to boost their tax returns. These methods can include child expenses, family benefits, employment expenses, registered retirement savings plans or RRSP contributions, and medical expenses, to name a few.
Here are five of the best ways individuals can take full advantage of credits and deductions to reduce their taxes. Bear in mind that this list only contains simple explanations of how they work. However, each entry has technicalities that may require a tax assessment expert.
1. Student Loan Interest
If an individual or their child studies at a post-secondary institution, they can reduce the interest paid on a student loan. However, the loan must be received through the Canada Student Financial Assistance Act, Apprentice Loans Act, Canada Student Loans Act, or any similar law.
Remember that this deduction does not apply to things like lines of credit or personal loans. Individuals can apply this deduction if they owe taxes. Otherwise, they would be better off carrying it forward. Interest, for example, can be carried forward to any tax return for the subsequent five years.
2. Employment Expenses
Employees can deduct work expenses like office supplies and cellular phone bills if asked by their employer to purchase them. Those working in education can claim up to $1,000 for teaching supplies.
3. Childcare Expenses
If an individual has a child under 16, they may be eligible for a deduction. Expenses for childcare include summer camps, daycare centers, caregivers like nannies, and overnight boarding schools. Typically, the deduction through childcare expenses goes to the spouse with the lower income.
4. Property Taxes and Rental Payments
Property owners, specifically landlords, are eligible to claim property taxes for the duration of which any of their rental properties were vacant. Self-employed and employed tenants can claim part of their rent payments under home office expenses. That is provided these tenants use their homes for business or employment purposes.
5. Child and Spousal Support Payments
One thing that can noticeably impact a person’s tax bill is support payments sent to a child, former spouse, or both. The tax rules have specific rules depending on the type of support, whether for a former spouse or a child.
When in Doubt, Hire an Expert
While these entries are some of the more prominent ways to maximize tax returns, they are not the only ways. While many people ought to figure out the whole process themselves, hiring a tax assessment expert is highly recommended to eliminate all the guesswork.