Preparing your income tax return

Are you a student, a part-time worker or new to the job market? Here are some tips to help you file your tax return.

How do I know if I have to file a tax return?

That’s a great question! Anyone earning income, regardless of age, must file a tax return. There are lots of advantages, even if your income is low or you’re a student. You may be eligible for social programs that may give you some wiggle room if you’re on a tight budget.

Income tax is calculated using taxable income, which includes all your income. If you were paid a salary, your employer most likely deducted taxes withheld at the source and paid them directly to the government. However, said deductions might be insufficient or exceed the actual calculated income tax. Preparing your tax return means it’s time to crunch some numbers!

It can be a bit intimidating if you’ve never filed a tax return before, but armed with the right information and plenty of time, it will be much easier. You could also hire a professional to handle everything.

What are the benefits of filing my tax return?

Students and workers can benefit from several types of tax credits. Here are a few examples:

1. Federal GST/HST credit

You may be eligible for this credit if you’re 19 or over in the previous month from and at the start of the month in which the quarterly payment is made, are a Canadian resident and don’t have a lot of income.

Solidarity tax credit

This credit is available to Quebec residents. If you’re 18 or over as of December 31, you may be eligible for a quarterly payment starting in July of the following year. If you meet these criteria, you may receive a cash deposit every 3 months! Not bad, right?

Don’t forget your RL-31 slip!

Do you pay rent? The RL-31 slip is used to report dwelling occupancy information as at December 31, and your owner must provide it to you no later than the last day of February following the year in question. It enables you to benefit from the housing component of the solidarity tax credit, if you’re eligible.

2. Tax credit for interest paid on a student loan

Do you have a student loan granted under an education assistance act? The interest you pay on your loan repayment make you eligible for a non-refundable tax credit. Each December, your account statement will show the total interest you paid during the year. You can apply for this credit provided you use the amount within 5 years at the federal level. However, there’s no provincial deadline.

3. Tuition fee tax credit

Both provincially and federally, you can claim post-secondary tuition fees for eligible programs or courses. It offers tax savings that could reduce the amount you owe or even increase your tax refund! A deferral mechanism is also provided if you don’t need this credit to reduce your income tax to zero. You can also transfer some of it to your parents.

4. Deducting moving expenses

This one’s often overlooked, but if you need to relocate for a new job or internship, or to go to college or university, you can claim the related moving expenses if you meet certain conditions.

5. Building up RRSP contribution room

Your RRSP contribution room is the amount you can contribute to your RRSP and deduct from your taxable income per year. If you don’t contribute all or some of that amount, it’s carried over to the following year and accumulates over time. That means your RRSP room is adjusted year after year when you file your tax return. If you ever want to buy a home in the next few years, this room will be a big help to contribute to your RRSP, then withdraw from it as part of the Home Buyers’ Plan (HBP) to make a down payment!

Note that some credits vary from one province to another. All of those in the aforementioned examples apply in Quebec.

Direct deposit

Sign up for direct deposit from the Canada Revenue Agency and Revenu Québec directly through the online and mobile AccèsD platforms to receive your tax refund and various government payments.

Remember that you need to sign up for direct deposit to receive the solidarity tax credit in Quebec.

What’s the deadline for filing my tax return?

You have until May 2, 2022, unless the government states otherwise. This date is important for those who owe tax. Why? To avoid late fees!

If the government owes you money, you won’t be penalized for filing late, but any refunds or government credits paid based on your reported income may then be delayed.

What if I owe taxes?

This happens sometimes, and you’ll know once you’ve filed your return. You have until May 2, 2022, to pay this amount for the 2021 tax year. If your payment is late, interest will be added to your balance, which will increase the amount due.

What do I need to know about tax treatment when I receive my member dividend?

You may receive tax statements based on your member dividend and other income paid by your caisse. T5 (Ontario only) and Relevé 3 slips are produced when amounts exceed $50. If you’re a member in more than one caisse, you may receive more than one slip.

Learn more about member dividends and their tax implications on the dedicated web page.

Good to know

TurboTax offers a free version of its tax return software to students and people who have simple tax returns, and who know the credits and deductions they are entitled to. Click here to take advantage of this offer.

Here are some sites where you can find out everything you need to know about federal and provincial taxes.