Your tax return is an important financial document and tax planning should really happen year round. The good news for your 2014 tax return is there are some new tax credits available that could help reduce your tax bill.
Caroline Battista from H&R Block Canada highlights some of the new credits for 2015:
- Increases to Universal Child Care Benefit: Do you have children under the age of 18? If so, you will benefit from changes to the Universal Child Care Benefit. The government is increasing the amount to $160 monthly (from $100) for each child under the age of six. New this year, is a monthly $60 benefit for children aged six through 17. The increase for January to June will be paid in a lump sum in July 2015 and will then be paid monthly after that. Remember, this money is taxable in the hands of the lower income spouse.
- New Family Tax Cut: Designed as a limited form of income splitting, the Family Tax Cut allows families with children under 18 to save when one spouse earns considerably more than the other. Put simply, this credit allows a higher earning spouse to assign up to $50,000 from his or her tax return to the lower-income spouse’s return and claim up to $2,000 in tax savings. Here is an example:
- Spouse 1: Earns $50,000 per year – portion of income in excess of $43,593 taxed at 22 per cent
- Spouse 2: Earns $30,000 per year – entire income taxed at 15 per cent
By splitting the higher income with the second spouse, the entire income of $80,000 ($40,000 each) would be taxed at a rate of 15 per cent. This would result in tax savings of $423. One of them can therefore claim the family tax cut for this amount.
- Doubled Children’s Fitness Tax Credit: The amount you can claim for the Children’s Fitness Tax Credit has doubled from $500 to $1,000 and is retroactive for 2014. Parents should claim the receipts for eligible activities such as swimming lessons or hockey in the year they paid – not the year the activity takes place.
- New Search and Rescue Credit: Search and rescue volunteers who put in 200 hours or more of work can now claim a personal amount of $3,000, which means $450 tax savings. This was created to complement the volunteer firefighters credit.
Keep in mind that there are many other credits already in place that could help you increase your tax refund or reduce the amount of tax you owe. For example, the First-Time Donor Super Credit provides extra credit for first-time donations. For first time cash donations made after March 20, 2013, you can claim 40 percent on the first $200 of donations and 54 per cent for donations between $200 and $1,000.
If you have misplaced receipts, take the time to track them down. No one wants to pay more tax than they need to so make sure you don’t miss a thing.
If you’re unsure of what you can claim, an H&R Block Canada tax professional can walk you through what’s new for your tax return this year. For more information please visit www.hrblock.ca.
H&R Block is pleased to offer ONE gift certificate to give away to a lucky Boomer & Echo reader. The gift certificate is good for one regular return (T4) that can be used at a retail H&R Block location. Value: approx. $100. To enter, simply leave a comment below before Friday February 13th at 5:00pm EST.