Students can file their own income tax

Advantages include access to rebates

Q: I am 19 and in my first year of university studies here in Montreal. I didn’t work last summer but my parents are paying for my studies with money f rom a Registered Education Savings Plan (RESP). They are asking me for my tuition receipts for their taxes, but should I be doing my own taxes? A: Thank you for a question, which I think will incite lively family discussion between parents and young adult students during our annual tax season. I fondly remember doing my taxes for the first time after leaving home (at age 19) and the satisfaction it brought me to calculate my modest re- funds for myself (in pencil on many hard copy forms). It was an important rite of passage into adulthood that helped me to gain confidence in managing my money.

Today, with a different economic reality, the rite of passage into independent adulthood takes place over a period of years. This is recognized in many employer benefit plans, which allow for full-time students to be covered for health and dental insurance up to age 25. The Quebec and Canadian governments recognize that adult children still in school may be dependent on their parents for financial support and so both govern- ments allow parents a range of tax credits and transfers to alleviate their financial burden. Thus, if you are still living at home or otherwise dependent on your parents, your tax situation is by necessity a family affair.

Cue the miracle of tax software. Gone are the days of painful drawn out calculations and fumbling between multiple forms to see how much of a particular tax credit should or could be transferred to one or other family member in order to maximize the tax benefit for the entire family. Today, any recognized Canadian tax software will calculate each family member’s tax data separately and provide a default optimization strategy that can be customized as the taxpayer chooses.

So to answer your question. You should be submitting your personal tax returns for 2012 because the RESP income you received as well as your tuition tax receipts must be reported to Quebec and Canada in your name.

I believe that if the young adult is self-supporting, the student keeps the tax credit.

You should have a T4A from the financial institution that is holding your RESP with the income you received in box 042 (for Quebec, Relevé 1, box O). You will likely need to access your school’s student accounts website to print out your Federal T2202 and your Quebec Relevé 8 and tu- ition fees. If you went to two schools last year, don’t forget to get those tuition receipts as well.

You and your parents will decide together if and how much of your tuition tax credit should be transferred to their tax returns. Personally, I believe that if the young adult is self-supporting, the student keeps the tax credit and gets to carry it forward to future years, but if parents are financing the studies, parents get the transfer.

A huge bonus for you as a low-income student is that filing your tax returns will allow you to access rebates for the Goods and Services Tax (http://tinyurl.com/62s6ga3) and the Quebec Solidarity Tax (http://tinyurl.com/ cj4ebul). These monthly/ quarterly amounts are deposited directly to your bank account and could add up to over $700 a year, depending on your income.

So do take the initiative and talk to your parents about preparing your own tax return and try using one of the many recognized online tax websites that will allow you to do so for free. Better yet, why not do everyone’s tax returns and become the expert for the entire family?