Everything you need to know about income tax returns as a student

10 March 2020 by National Bank of Canada
Student on tax return

It’s the middle of tax season. Your parents look stressed out and everyone keeps talking about taxes. Unless you have a bachelor’s in income tax returns, chances are you have a few questions about this oh-so fascinating subject (just joking). “Do I really have to pay taxes?” “Is it true that the government will give me a refund?” If you’re a student, we’ll explain why you should file your tax returns and how. We did the research so you won’t have to.

How do I find out whether I need to file an income tax return?

If you want to do your civic duty (which you are required to do, by the way), you must file your income tax. That’s true regardless of your age, your education, whether you’re a part-time or full-time student, and even if you still live with your parents. Whether you’re a minor or 25 years old, you must file your income tax return if you earned an income. If you didn’t work, it might still be a good idea to file your tax return. If you’re a student, the government may give you tax credits. Are tax credits a good thing? Yes, absolutely! We’ll get back to that later.

What am I supposed to declare?

To answer this question, you need two things: some definitions from the Canada Revenue Agency (CRA) and some good old-fashioned common sense. “Taxable income” refers to any money you received as income, in commissions or as tips. Don’t worry, these amounts usually appear in box 14 on the T4 statements your employer sends you. They include all the money you received as compensation, whether you were an on-call, part-time, full-time or self-employed worker. It also includes other things like scholarships, research or apprenticeship grants, investment income, RESP payments and—surprise, surprise—tips. Students who work in the service industry know how profitable tips can be, to the point where it’s legally considered to be taxable income. Regardless of how you earn your income, you have to declare it on your tax return.

Earnings that don’t get taxed include the GST/HST credit, student loans, lottery winnings (yeah, some people have all the luck!), gifts, and anything received in an inheritance.

What’s the due date for filing my income tax return?

Unless otherwise stated by the federal and provincial governments, you have to file your income tax return for a given year by April 30 of the following year. We won’t judge you if you’re the type to cram the night before a deadline or a test, but keep in mind that the government’s due date is absolute. You can fill out your income tax online or send a paper copy by mail. Like many things in life, online is generally faster. Most students can expect a tax refund… as long as you paid your taxes, of course. Since your tax return is relatively less complex, we recommend sending it as soon as you can, when the CRA is less busy. They should get back to you two weeks after your documents have been processed. If you’re still a fan of snail mail and sent a physical copy, it should take about eight weeks. In any case, the good folks at the CRA will let you know if you owe any money to the government or if you’ll receive tax credits. Don’t worry too much. If you’re a full-time student, the second scenario is far more likely.

Tax credits: A full-time student’s BFF

Some tax credits are refundable, meaning the government will pay you the amount directly, whether you have any taxes to pay or not. Others are non-refundable, which just means that they’ll be used to reduce the taxes you owe, if applicable. Here are the tax credits students claim most often:

  1. Quebec solidarity tax credit: It exists to offset housing costs and sales taxes for low-income households, which obviously includes students. This tax credit can even be claimed retroactively under certain conditions. Treat yourself and enjoy!
  2. Canada employment amount: This is available to you if you worked during your studies.
  3. Tax credit for tuition: It’s equal to 15% of what you pay every year for your education, which includes tuition, admission fees and exam fees.
  4. Credit for interest paid on a student loan: It can be claimed if the government gave you financial aid for your studies.

Balancing your income tax, homework, bank account...

It's not always easy, but the right tools can make a huge difference.

Deductions: Almost as cool as tax credits

Deductions are amounts that are subtracted from your taxable income. Rest assured that this is an excellent thing. The ones that are claimed most often by students are deductions for moving expenses. You must be attending CEGEP or university full-time (as a student or intern). You need to have moved at least 40 km closer to school or to the place where you’re doing your internship. Deductions cover transportation fees, the cost of cancelling your lease, and other helpful things like fees for changing your address and hooking up your utilities. To be able to claim all this, you need documents supporting your claim and the expenses have to be reasonable.

If you’re studying and raising a child at the same time, hats off to you. We encourage you to take advantage of the childcare expense deduction and other tax measures that support families.

Where do I start to file my income tax return?

There’s only one way forward: ask for help. Many schools and community organizations run tax clinics to help students and people with low income. They have kind volunteers who can guide you through it all. If you have a knack for this sort of thing, there are websites and software that can help you do your taxes. As long as you enter the right information in the right boxes, the algorithms will determine the tax credits and deductions you’re eligible for.

Now’s the fun part. You can speak with your financial advisor to figure out what to do with your tax refund. You could save it or even invest it. Honestly, whether you’re working part-time or not at all, it’s still a good idea to meet with your advisor from time to time. Imagine all the money you could save for a trip at the end of the semester or for a down payment on your first home! #lifegoals 

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