Written by: François Gagnon
For many of us, the months of March and April are often filled with tax headaches. Yes, tax season is back and in full swing! And the fact that you have until the stroke of midnight on April 30th to file your tax return does NOT mean it’s a good idea to wait until the very last minute.
Remember that we are required by law to fulfill our federal and provincial tax obligations. Too often, we forget that a late return means a balance owing with penalties that will incur unexpected interest costs. What’s more, since a number of tax credits are calculated based on family net income, a late return could mean forfeiting thousands of dollars―and all the more so if you have children.
Late filings also delay Canada Child Benefit (CCB) payments, Child Assistance payments (Quebec), the Solidarity Tax Credit and the GST tax credit, since all these amounts are adjusted yearly on July 1st.
When it comes to filing a tax return, there’s no point in dragging your heels; and an early start means getting a head start on the paperwork for this process. List all the documents you will need to complete your tax return and organize these into categories to make things easier.
Medical expenses are certainly the most commonly overlooked tax deduction as a result of lost or forgotten documents. If this happens to you while you’re covered by a group insurance, you can simply contact your insurer to know the amount you claimed during the year. If your prescription drugs are covered under the Régie de l’assurance maladie du Québec (RAMQ), go to your local drugstore and ask them how much you spent on prescription drugs in the past year for your entire family.
Medical expenses also include your bills from a dentist, occupational therapist, speech therapist, physical therapist, chiropractor, optometrist and podiatrist (which means you can deduct the cost of eye glasses and orthoses). These expenses can be claimed for your whole family, as long as they weren’t covered by your insurance, whether public or private.
If you meet the applicable provincial and federal requirements, you can deduct the money you spent on childcare during the year. In your federal tax return, these expenses must be claimed by the person with the lowest net income. In the province of Quebec, the tax credit rate is determined according to your family income; note, however, that for your provincial return, this credit is not available if your child attends a subsidized daycare.
Furthermore, in Quebec, you will be required to pay the Additional Subsidized Childcare Contribution if you have children under the age of six who attend such an establishment. In this case, your daycare will provide you with an RL-30 Slip indicating the name of your child and the number of days of childcare received for the year. Then, using this information, you can determine the amount you owe. The same goes for your second child, but no additional contribution is required for a third child or subsequent children.
Summer camp expenses also qualify as deductible childcare expenses, but calculations differ in this case. If your child was born during or after the year 2011, you are entitled to $200 credit per week. This amount hikes up to $275 if your child is eligible for the disability tax credit and was born during or before 2017. Finally, in the case of children born from 2001 to 2010 inclusive, you can claim a maximum credit of $125 per week.
The federal government ended the children's fitness and arts tax credits in 2017. While these credits are still available in the province of Quebec, they are not as generous―which led to both credits being combined. Accordingly, the Government of Quebec offers a 20% credit capped at $500.
Another credit that people often forget about is the First-Time Home Buyers' Tax Credit offered by the government of Canada (line 369 of Schedule 1, Federal Tax). You could claim this non-refundable tax credit if you acquired a qualifying home last year, provided you did not previously live in a home owned by you or your spouse in 2017, or during the four years prior. Also note that if you have a disability or you are purchasing a house for a relative with a disability, you don’t have to be a first-time home buyer to claim this tax credit.
Moreover, since 2016 you are required to report the sale of your home (if this sale occurred during the tax year) using Form T2091, which you must include with your tax return. This is an oversight you want to avoid as it could result in hefty monetary penalties.
Finally, remember to include all your RRSP contributions for the concluding tax year in your tax return, as well as any contributions made during the first 60 days of 2018.