Taxes as a Student: What you Need to Know
Filing a tax return as a student can pay off, and it takes less time than studying for your final exams! Find out how.
First things first: Filing your tax return is the only way to receive a GST credit from the Government of Canada and a solidarity tax credit from the Government of Quebec.
Are you working while you’re in school? Your employer may be taking taxes out of your pay. Yet students often make an income that’s below the limit of what is considered a taxable amount. Filing your income tax return allows you to be reimbursed for the amount you overpaid. What better way to help you breathe easier when you’re on a tight budget?
Tax credits to watch out for
When filing your taxes, you may be able to benefit from various tax credits.
A tax credit is a fiscal advantage in an amount that is either refundable or non-refundable. If it is non-refundable, you can use it to reduce the taxes you owe. If it is refundable, you will receive this amount whether or not you have taxes to pay.
1. Solidarity tax credit
If you are 18 years of age or older and you live with your parents, the solidarity tax credit is $287 per year. If you live alone, the amount is $981.
Starting at age 19, the GST credit is now $284 in 2019.
2. Canada employment amount
This tax credit is non-refundable. You can request it if you have a job while you’re in school. It could save you up to $150 in taxes.
3. Credit for school tuition
Quebec and Ottawa grant 8% and 12.5%, respectively. If you pay $3,000 in university tuition, your total savings would be $615.
Interesting. And if you do not owe anything in taxes, you have two options: carry the credit over to another year or transfer it to a loved one.
However, in 2017, the federal government eliminated the federal education amount as well as the amount granted for textbooks. Do you have unused amounts from previous years? You are allowed to request them when you need them.
4. Credit for interest paid on student loans
At the federal level, you have five years to request this credit. There is no time limit to benefit from the credit in Quebec.
This credit applies only to government student loans, such as those granted by Quebec financial assistance.
Deduct your moving expenses
Another way to pay less taxes is to deduct certain expenses. While a credit lowers the amount of taxes you have to pay, a deduction lowers your taxable income. There are several available, but the deduction for moving expenses is one of the deductions most used by students.
Are you moving for a job or an internship? If you are within at least 40 km of your workplace, you can deduct certain expenses from the income you earn there, such as gas and meals during travel, movers’ fees, etc.
And if you’re moving to be closer to your CEGEP or university, you can also deduct the cost of your relocation. To do so, you must be a full-time student and have received a research grant.
Don’t be shy—ask for help!
In March and April, a large number of teaching establishments and community organizations hold workshops about taxes, which is an ideal option for low-income earners. Volunteers can help you file your tax returns. Educate yourself!
Of course, you can also file your taxes with the help of a web application or software to make things easier. However, take the time to properly answer the questionnaire. The application will determine which credits and/or deductions you are eligible for, then automatically make the calculations.
If you have a child, you may also be entitled to a deduction for childcare and other family support measures. Other tax measures may be available to you. Get informed!
To ease your tax burden, we suggest you “do your homework” to help finance your studies.