University students may not earn a lot of money, but the Canada Revenue Agency (CRA) offers a range of deductions and credits, some of which can be carried to future years or transferred to other people. So there are many benefits to filing your taxes when you’re a student.
- Many students can claim the tuition tax credit by obtaining form T2202, and can transfer or carry-forward the credits.
- Students can claim the interest paid on their student loan as a tax credit, and must ask the lender for an annual statement.
- School-related, moving, tutoring, and child care expenses can all be claimed to reduce any tax owing.
Tax Credits for Students
Tuition makes up a big portion of a student’s expenses, and qualifying students can claim the tuition tax credit.
This non-refundable tax credit is used to offset part of the expense of college or university by reducing any tax the student may have to pay. This means that if your tuition amount is greater than taxes you owe, the tuition tax credit can reduce or eliminate your federal/provincial tax bill but won’t generate a refund.
Who can claim tuition tax credits?
Generally, any student over the age of 16 who is enrolled in post-secondary level or trades school courses at a Designated Educational Institution in Canada can claim the tuition credit. Schools outside Canada qualify if the time abroad is full-time study lasting at least three weeks.
If a student’s employer pays or reimburses tuition, the student is not eligible to claim the credit unless the employer includes the tuition amount in the student’s earnings. This is also true if an employer pays tuition to a parent on a student’s behalf.
T2202 Tuition and Enrolment Certificate
Colleges, universities and other accredited education institutions issue a T2202 – Tuition and Enrolment Certificate to certify that a student took eligible courses of suitable duration to qualify for the tuition tax credit.
Transfer or carry-forward
If you aren’t able to use the full amount of the credit, any unused credits can be carried forward to a future tax year, or transferred to a spouse/common-law partner or parent/grandparent. You can only transfer current year tuition (up to $5K). Prior year’s tuition can only be carried forward.
Taxable Income as a Student
All money received for work – occasional, part-time, or full time – is considered employment income. This includes salaries as well as any tips you collected. You will usually receive a T4 slip by the end of February from your employer.
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Registered Education Savings Plan (RESP)
Any interest received from a Registered Education Savings Plan (RESP) also counts as income earned. The carrier of your RESP will send a T4A that shows the amount of interest you received.
Scholarships, Bursaries, Fellowships and Apprenticeships
A certain portion of scholarships, fellowships and bursaries may be taxed as income, unless you are eligible for the education amount.
The program length, conditions and terms of the scholarship, and the length of time of the financial award are considered when deciding whether a scholarship is tax-exempt.
Full tax exemption applies to scholarships, fellowships and bursaries awarded for full-time study toward a diploma or degree, with the exception of postdoctoral study.
If you receive an artist’s project grant, you should declare it, but you may use a scholarship exemption, if applicable, to reduce your income.
Apprenticeship grants must be declared as income and will be on your T4A slip.
Research grants provided to cover expenses when pursuing research projects are considered income, but have expenses used to reduce the amount taxable.
These expenses include:
- Laboratory expenses
- Cost of minor equipment and supplies
- Wages paid to an assistant
There are also certain traveling and living expenses that can be included, as long they occurred in a place separate from your home.
Here are some of the most common tax slips you’ll need as a student:
- T4 – Statement of Renumeration Paid
- T4A – Statement of Pension, Retirement, Annuity, and Other Income
- T4E – Statement of Employment Insurance Benefits
- T2202 – Tuition and Enrolment Certificate
You can view these slips online on your CRA My Account in early March.
Student Loans and Taxes
Federal and many provincial governments cooperate to offer grants and loans to students in financial need. Canadian student loans are available to citizens, permanent residents, and protected persons who meet course load requirements.
When you repay your student loans, you are able to claim the interest as a non-refundable tax credit.
What kind of loans qualify for a nonrefundable credit?
Interest on student loans can only be claimed if you received the loan under:
- The Canada Student Loans Act
- The Canada Student Financial Assistance Act
- The Apprentice Loans act
- Similar provincial or territorial government laws
Loans from other institutions can’t be claimed, and you can’t claim the interest you paid if you consolidated your student loan with other debts. This means you cannot claim interest paid on any other kind of loan including a personal loan or line of credit.
How Do I Claim My Student Loan interest?
While the student loans eligible for the tax credit are administered by the federal and provincial governments, they’re issued through regular banks and other lending sources. Your lender will send you an annual statement reporting the interest amount on your loan. You enter this amount on your tax return.
Unlike some other education credits and deductions, you can’t transfer this credit to a spouse or family member. So, even if your parents are helping you cover the interest, only you can claim it on your return.
You can carry forward any unclaimed student loan interest to any of the next five years, so be sure to keep those documents in order.
4 Tax Deductions for Students
If you are a student, you probably don’t owe much in taxes, but you’ll still want to make sure you are getting the refund you deserve. Here are 4 credits or deductions you don’t want to miss out on at tax time.
1. Claim School Related Costs
Besides your T2202 tuition tax slip for your post-secondary institution, you may be eligible to deduct some other school-related expenses on your tax return.
Additional education expenses can include:
- Cost of identification card
- Examination fees
- Admission fees
However, travel, parking, and equipment expenses such as lab coats, calculators or computers are not eligible for deductions.
If you are unsure if these costs were included in your T2202, contact your student services office to clarify the expenses included on your T2202 slip.
2. Claim Moving Expenses
If you moved at least 40 kilometers to go to school full-time, you may be able to deduct moving expenses on your tax return. However, this only applies if you received taxable income through scholarships, grants, or bursaries.
There are a number of things you need to provide to claim moving expenses, including:
- the address of your school, your old residence & your new residence
- the distance (in kilometers) from your old home to your school
- the date you started your studies
Make sure you have all needed information to claim your moving expenses.
3. Claim Tutoring Expenses
Students with a learning disability may be able to deduct tutoring expenses along with other medical expenses for their special needs. To be eligible, you need to submit a certified letter from a medical practitioner about the mental and/or physical impairment and stating that tutoring is necessary.
4. Claim Child Care Expenses
If you attend school and pay for care for a child younger than age 16 — or a child who is physically or mentally impaired you may qualify to deduct child care expenses.
Married or common-law students may transfer this deduction. Usually, the lower income spouse claims child care expenses. 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.
25 or younger? File your taxes for free with TurboTax
Whether you want to file on your own or hand them off to a tax expert, it's $0.