Why students should file a tax return

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Students should file taxes every year, even if they don't have a substantial income.

The deadline for general income tax filing – April 30 – is weeks away, and according a Fanshawe College tax expert, many students aren’t as knowledgeable as they should be when it comes to their finances.

“I think a lot of people find tax very intimidating and complicated, and they don’t realize that through their individual situation, it’s something they can manage,” Lynn Okanski, a financial planning instructor at the Lawrence Kinlin School of Business, said.

With over 25 years of experience in the financial services industry and 10 years of instructing, Okanski spoke with Interrobang about the basics of what students need to know during tax season.

“It’s empowering to be able to understand your own taxes,” Okanski said.

One of the most common mistakes students make is not filing a return at all, thinking they don’t owe any tax since they have little to no income. However, failure to file when you do owe something is a criminal offence, and can lead to penalties, interest, and possibly jail time.

Skipping tax season also means potentially missing out on receiving benefits such as HST tax credit, Canada Child Benefit, and tuition credits.

The rules around tuition credits have been changing, but students can still claim a federal tax credit for tuition paid during the tax year and use the credit in the future. They can also opt to transfer up to $5,000 to a parent, spouse, or grandparent.

“Tuition is the amount showing on your T2202A form. It excludes ancillary fees,” Okanski explained. “The federal tax credit is 15 per cent of the tuition amount. If you paid $2,000 in tuition, that means you get a credit of $300 that you can use to reduce tax in future years.”

Forgot to file your return last year? No problem, Okanski said.

“You can still go back later and file a return for a previous year. Just make sure to get your T2202A from your educational institution to get the information you need.”

Students also tend to miss out on claiming a deduction for moving expenses, even if it means moving back and forth between school and home or leaving for a temporary summer job. Receipts for renting a U-Haul, meals per day, plane fare or gas should be retained and included in returns for returning students. This can reduce a student’s tax payable, depending on the amount of their earnings. Graduates can also deduct moving costs when moving somewhere for a permanent job.

It is important for international students to determine their residency status. Residents or those deemed residents must file a return, as well as non-residents with any Canadian source of income.

Cash income, such as tips, must be reported.

“If you earn tips, or other cash income, you should keep a log book with dates and amounts,” Okanski said. “If someone tells you that you don’t have to report tips, or you can report less than you received, don’t believe them. They are wrong, and you could suffer serious penalties.”

Okanski said that filing a tax return is easier than most students think, and recommended they download the CRA General Income Tax and Benefit Guide each year to stay up to speed on updates.

To learn more, go to canada.ca/en/services/taxes/income-tax.