(Toronto – 7 April 2010) EY is serving up practical tips to help save you money this tax season.
1. Rewarding renovations. If you undertook any home renovations, remember the one-time home renovation tax credit. Projects undertaken between January 27, 2009, and January 31, 2010, are eligible for the credit, up to a maximum of $1,350.
2. Home, sweet home. If you bought your first home after January 27, 2009, you are entitled to a $750 credit.
3. Turn your losses into gains. Capital losses can be applied against capital gains. Your net capital losses for 2009 can be carried back three years and applied to net gains in any year from 2006 to 2008. If you incurred business investment losses, you can claim them against any income in the year, not just capital gains. And if you have net capital losses from prior years, you can apply them to reduce taxable capital gains realized in 2009.
4. Share the love… and your income. If you received eligible pension income in 2009, up to 50% can be reported in your spouse’s or common-law partner’s tax return.
5. Helping others pays off. If you gave to charity in 2009, you need to look into the federal tax credit for donations. This will help you decide if you should accumulate donations made over a few years or claim at once for the higher-rate credit. If you’ve donated stocks, bonds or mutual funds, additional tax benefits exist.
6. Sometimes less means more. You should claim all the family’s medical expenses in the lower-income spouse’s return. But remember — the individual who is making the claim should have sufficient income to absorb the entire credit. Dependent relatives’ expenses can sometimes be included.
7. Keeping it in the family. From child tax credits for children under 18 to an adoption expense credit or the child fitness credit — your family could be eligible for a host of tax reductions. Make sure you look into the possibilities.
8. Who’s the boss? If self-employed, you can claim a number of business-related expenses and reduce the tax you pay. Car and parking expenses, business association fees, convention costs and home office expenses, salaries paid to assistants including family members: the list is long. Exhaust all possibilities.
9. Check your files — twice. Some old receipts may still have value in your 2009 return. Receipts for charitable donations and medical expense receipts could be of particular interest.
10. Moving on up? If you moved in 2009 to start a new job, business or post-secondary education, you may be able to claim certain expenses from the cost of moving to travel costs, including meals and lodging while en route.
11. Don’t forget the kids. Filing tax returns for children who had part-time jobs or have been paid for various small jobs (lawn care, babysitting) establishes contribution room for RRSPs (contributions can be made in any future year). Filing returns for older teens can also mean a refundable tax credit or GST credit.
12. Do you have any carry-forward balances? Check your prior year return and Notice of Assessment to see if you have any carry-forward balances that may be used as deductions or credits for 2009.
13. Go high tech. Using income-tax software to prepare your tax return has many benefits. Return preparation is generally quicker, easier and less open to mechanical errors. Remember, even if you file electronically, keep your receipts.
EY’s Guide to Preparing 2009 Personal Tax Returns offers more detail on these suggestions and ideas. Of course, it doesn’t hurt to get started on 2010 tax savings now. Look into how you can take advantage of a tax-free savings account this year. RRSPs are also a great way to optimize tax-deferred investment income.
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