The last thing we want is for our kids to be worried about their money and financing while they’re concentrating on their studies.
A recent BMO survey, however, revealed they are stressed out about those topics, expecting to be in debt $27,000 by the time they finish their education.
Last week, we showed you how to save money for your children’s education, and benefit from matching government grants.
Today, we’ll show you how claiming education expenses can help reduce your tax bill (or increase your tax refund!) next spring.
Your tuition, education and textbook amounts are eligible amounts to claim on your income tax return. Students can even transfer some of the amount over to their parents.
How do I claim my education expenses?
The Canada Revenue Agency demands you be enrolled in a “qualifying” or “specified” program before you can claim your tuition amounts. A qualifying program is one that lasts at least three consecutive weeks and requires a minimum of 10 hours of instruction or work in the program each week, not including study time. A specified program lasts at least three consecutive weeks and requires eacch student spend not less than 12 hours of instruction in the month on courses in the program.
For either a qualifying or specified program, instruction or work can include lectures, practical training, lab work and, for post-graduate students, thesis research time.
Your eligible expenses include:
- Admission fees
- Charges for the use of library or laboratory facilities
- Examination fees that are integral to a program of study
- Ancillary fees, including the cost of identification card and certain prerequisite study materials, which exceed $100
- Application fees (but only if the student later enrolls in the institution)
- Charges for a certificate, diploma, or degree
- Mandatory computer service fees
- Academic fees
- The cost of any books that are included in the total fees for a correspondence course taken through a post-secondary educational institution in Canada
- Fees, such as athletic and health services fees, when such fees are required to be paid by all students (limited to $250 if the fees are not required by all students)
Some fees — including student association membership, medical expenses, room and board, computer and lab equipment — are not considered eligible expenses. Check the CRA’s guide for studentsfor a full list of ineligible expenses.
Your educational institution will provide you with a T-2202A, the Tuition, Education and Textbook Amounts Certificate, listing the amount you paid in tuition. This is the most common form and applies to individuals studying at a post-secondary institution in Canada. If you are studying abroad or at a flying school, you may need to request a different certificate from your school.
What is the education tax credit?
You can also claim a non-refundable credit for each month of study.
If you are a full-time student, you can claim an education amount of up to $400 a month and up to $65 a month for books for every month you are in school. Part-time students claim an amount up to $120 a month and $20 a month for books for each month you’re in school.
The T-2202A, or applicable certificate, shows the number of months you were enrolled in a qualifying or specified educational program.
Transferring your tuition claim
Some students don’t have enough income to justify using their tuition costs, education amount or textbooks amount.
You can either carry forward these amounts to future years, or you can transfer the costs to a spouse, common-law partner, or a parent or grandparent of you or your partner.
You can transfer up to $5,000, less the costs you’ve claimed as a student. This becomes a $750 tax credit for your parents or partner. Any remaining costs can still be carried forward.
To transfer your education costs, complete and sign your T-2202, designating the individual to whom you are transferring the amounts.
Can you help?
We’re here to assist you with your taxes and planning. We specialize in personal taxes and small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.
Fill out our contact form or give us a call at 403-226-8297.
The Canada Revenue Agency has an active Twitter account. If you’re interested in following the account, you can the CRA at@CanRevAgency.