Top tips for income-tax filing time

Many Canadians have been so busy responding to the COVID-19 pandemic that they haven’t had time to think about their taxes. That’s because they’ve been adjusting to working from their living rooms—if they’re among the lucky ones—or scrambling to cover expenses if they’re part of the three million who lost their jobs in March and April.

But it’s also important to keep in mind that the federal tax deadline is Monday (June 1) for those who file T1 returns, which is used for personal income taxes. The self-employed can wait until June 15, and all taxes must be paid by September 1 to avoid penalties or interest.

H&R Block Canada has helped Canadians file more than 50 million tax returns over 55 years.

It has a long list of tax tips on its website, covering a range of topics.

EMPLOYMENT EXPENSES

The Canada employment amount of $1,245 can be claimed to cover incidental employment expenses, even if the person has no receipts. Other employment expenses can only be claimed if the taxpayer has obtained from their employer a signed T2200 Declaration of Conditions of Employment.

STUDENT LOAN INTEREST

This can be claimed as a tax credit, which means it gets deducted directly from the amount of tax owed. But interest on private loans or lines of credit cannot be claimed on a tax return.

SEVERANCE PACKAGES

These are taxable as lump-sum payments. For very long-term employees, it’s sometimes possible to transfer some of this to a registered retirement savings plan, which would shield it from being taxed until it’s withdrawn from the plan.

HOMEBUYERS’ AMOUNT

It’s possible to claim $5,000 for the purchase of a “qualifying home” over the previous year if you did not live in another home owned by you, your spouse, or your common-law partner in any of the four preceding years. A qualifying home can be a single-family house, semidetached house, townhome, mobile home, condominium, or an apartment in a duplex, triplex, fourplex, or apartment building. It’s possible to make this claim if you buy a share in a cooperative-housing corporation that gives you an equity interest in the property. But no claim can be made if the share only provides the right to tenancy rather than homeownership.

PART-YEAR RESIDENTS

Everyone must report their world income after they move to Canada. Moving expenses are not deductible except if a student is studying at a postsecondary institution. In this instance, moving expenses can be deducted against the taxable portion of scholarships, bursaries, fellowships, prizes, or research grants.

OUT-OF-COUNTRY TUITION COSTS

If the school outside of Canada is recognized by the Canada Revenue Agency, the taxpayer can deduct tuition costs.