There is perhaps no better time to learn how to file your tax return than when you are a student attending college or university. Student tax returns are often simpler than other tax returns, as students don’t usually have as much employment income, which can make filing a lot less tedious. The hardest part is usually claiming tuition, education and textbook amounts. Here are some tips for students as they prepare to file their tax return with income they may have received to further their education and the credits or deductions available specifically to them.
Gather Your Tax Slips
Before a student files a tax return, they must gather all of their necessary tax slips. Students should be looking for the following slips depending on their own individual situation:
- T4 – Statement of Remuneration Paid: Many students work throughout their studies or while on summer vacation. They should receive a T4 slip and remember, if they work in the hospitality industry, they need to also claim their tips and gratuities as income.
- T4A – Statement of Pension, Retirement, Annuity, and Other Income: Students may receive a T4A tax slip showing income received for different reasons. Let’s look at the different types of income on this slip and where they are reported.
- Educational Assistance Payments from a Registered Education Savings Plan (RESP) are shown in Box 042 of the T4A slip and reported on Line 13000 – Other Income of your tax return.
- Students who receive financial awards such as Scholarships, Bursaries, Fellowships, Artists’ Project Grants, and Prizes will receive a T4A with an amount in Box 105. It’s important to note the Scholarship Exemption and ensure you enter your Box 105 amount into the correct box of your tax software in order to receive the exemption. The taxable portion of these scholarships/awards will be entered on Line 13010 – Scholarships, Fellowships, Bursaries, and Artists’ Project Grants of the tax return.
- T4E – Statement of Employment Insurance Benefits: Students who receive Tuition Assistance will receive a T4E slip showing if the assistance was taxable or not taxable.
- Box 20 – Taxable Tuition Assistance: This amount is included in Box 14 and also Box 17 or Box 33 of the T4E. If you receive taxable tuition assistance, you should also receive a T2202 Education & Textbook Amounts Certificate which allows you to claim an Education Tax Credit and offset the taxable income.
- Box 21 – Non-taxable Tuition Assistance: If you receive non-taxable tuition assistance, you are not entitled to claim any offsetting education tax credits and will not receive a T2202 slip. This amount is also reported on Line 25600 – Additional Deductions.
- T2202 – Education, and Textbook Amounts Certificate: Although some colleges and universities provide or mail tax slips, most schools leave it up to students to retrieve them electronically. Students can generally download tax slips from their college or university’s website. Students who pay tuition to an eligible college or university should download this tax slip as it has important information for claiming the tuition, education and textbook amounts.
CRA My Account holders may view these slips online in early March, including the T2202 which many Designated Educational Institutions are already filing online and having them included in your account.
Claim Tuition, Education and Textbook Amounts
Full-time and part-time college and university students are entitled to claim the tuition, education and textbook amounts. These amounts are claimed on Schedule 11 for both federal and provincial credits. Students eligible for the deduction receive a T2202 tax slip from their college or university. A student claims the amount of tuition they paid during the tax year and enters any applicable full or part-time months.
The tuition deduction is a non-refundable tax credit. If a student does not have enough taxable income and does not need to use the full amount to reduce their tax payable, they have two options: transferring or carrying forward the unused amount. In both cases, the tuition needs to be reported on your tax return in the year it is incurred from either a T2202 tax slip or an official receipt. Even if a student has no other income or deductions to report, they need to file their tax return and include their T2202 if they choose to carry it forward or transfer it.
- If the student chooses to carry forward the amount to a future year, they must claim the carry forward amount in the first year they have tax payable. The amount of Federal and Provincial Tuition Carry Forwards should be verified with CRA (by phone or online) prior to filing the tax return. (You do not have the choice to carry forward the amount if you need to use it and CRA will apply it automatically to reduce your tax payable).
- The other option is to transfer the credit. You can transfer any unused amount to your parents, grandparents or spouse/common-law partner. The student completes Schedule 11 to determine the amount that can be transferred and cannot transfer any carried forward amounts.
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