Education

Student Taxes 101: How to Maximize Your Deductions

A good education can open doors, but with the cost of tuition increasing steadily, you may also open the door to debt. The good news is, as a post-secondary student, you and your family can benefit from student-based tax breaks available to Canadian taxpayers.

Tuition Tax Credit

Tuition paid for post-secondary education in Canada may qualify for a tax credit. Tuition paid outside of Canada also may be eligible, provided that you attend a university full time and enroll in a course of study leading to a degree. Also, new for the 2017 tax year, the tuition tax credit can apply to fees paid for occupational skills courses offered at post-secondary educational institutions in Canada that are not at a post-secondary school level.

If you’re a low-income student, you may not need to use the entire tax credit in a particular year if you don’t owe taxes. Instead, transfer up to $5,000 in tuition credits to a spouse or partner, a parent or a grandparent to help reduce their taxes. To do so, be sure to file your own tax return and elect to transfer the tuition credit to your relative.

Another option should you not be able to use the full tuition credit is to carry it forward to use in future years.

Student Loan Interest Credit

You may carry forward interest from the last five years on loans under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or similar provincial or territorial government laws. However, this amount is non-transferable, and there are several restrictions.

The amount is only eligible if it hasn’t been claimed previously. And, it only includes student loan interest, not interest on other loans, including consolidation loans. This deduction also excludes interest paid as a result of a judgement against you for failure to pay back your student loan.

Moving Expense Deduction

If you move more than 40 kilometres to attend a post-secondary institution full time, you may qualify for the moving expense tax deduction.

Look at the tax slip from the educational institution. If Box C — full-time enrollment — includes an amount, you are considered eligible.

However, there’s a catch. These expenses are only deducted from the taxable part of scholarships, fellowships, bursaries, certain prizes and research grants.

You may claim multiple moving expenses in one tax year, including the eligible expenses incurred at the beginning of each academic period and those incurred when returning to school after summer break.

Child Care Deduction

Students, who are also parents, may qualify to deduct child care expenses. Those who attended school and pay for care for a child younger than age 16 — or a child who is physically or mentally impaired — may qualify for the child care expenses deduction.

Married or common-law students may transfer this deduction. Usually, the lower income spouse claims child care expenses.

But, the higher net income spouse may claim the child care expenses if their spouse or common-law partner attended an educational program, lowering the family’s overall income tax burden.

Mass Transit Breaks

Students or their spouses may claim eligible public transit costs if they haven’t already been claimed by another person in the family, or if they haven’t been reimbursed for some or all of the cost.

This includes transit costs for the student and her spouse and children under 19 years old. Eligible transit passes may include unlimited weekly passes, monthly or annual unlimited cross Canada or local passes and electronic payment cards. The transit pass deduction has been eliminated after June 30, 2017.

Check out this short video for our top tax tips for students: