How to estimate your tax refund as a student
While filing taxes can seem like a daunting task, many students look forward to tax season as the unique credits and deductions available to them often results in a refund, just in time for the summer break!
As a student, the process of filing taxes may be new for you, so it’s easy to feel anxious about filing, especially if you’re unsure what your refund might look like – or let’s be honest, if you’ve planned a summer vacation banking on a substantial refund to pay for it!
The good news is that we’re here to help, and there’s a ton of information that can help you to predict what your tax return might look like, such as identifying your income, tax bracket and the credits and deductions available to you.
Or, if you’re looking for a quick estimate, we have a tax calculator that does the trick, or you can sign in to our tax software to get a 100% accurate calculation of your return with all your credits and deductions – and it’s free!
Identifying your Income
As a student, what must you report as income, you ask? Your income is considered all earnings for the year, from a part-time or contract job to self-employed income.
Your employers must send you a T4 slip by the end of February which outlines your earnings for the year, and employment-related deductions such as union dues. If you worked several different jobs, you will receive a T4 from each one. If you earned additional income from freelance work or tips from a serving job, those will need to be claimed as income in addition to what’s already marked on your T4.
Did you know…
- Student loans, such as The Ontario Student Assistance Program (OSAP), are not considered income
- Scholarships are exempt from tax for all full-time students, so that’s not considered income either
- Interest received from your RESP must be declared as income
- You can finance full-time education or training for yourself, your spouse or common-law partner by withdrawing amounts from your RRSP, under the Lifelong Learning Plan (LLP)
Identifying your Tax Bracket
Your income falls into one of four tax brackets, based on your taxable income with each bracket paying a different tax rate. People with lower income pay a lower tax rate than those with a higher income. Provincial tax rates are calculated the same way as federal tax (except for Quebec). So where do you stand?
Federal Tax Rates for 2018:
- A tax rate of 15% is taxed on total earnings up to $46,605 *This is the most common tax bracket for students
- A tax rate of 20.5% is taxed on total earnings between $46,605 and $93,208
- A tax rate of 26% is taxed on total earnings between $93,208 and $144,489
- A tax rate of 29% is taxed on total earnings between $144,489 and $205,842
- A tax rate of 33% is taxed on total earnings over $205,842
Provincial tax rates for 2018:
- 10% on the first $128,145 of taxable income, +
- 12% on the next $25,628, +
- 13% on the next $51,258, +
- 14% on the next $102,516, +
- 15% on the amount over $307,547
- 5.06% on the first $39,676 of taxable income, +
- 7.7% on the next $39,677, +
- 10.5% on the next $11,754, +
- 12.29% on the next $19,523, +
- 14.7% on the next $39,370, +
- 16.8% on the amount over $150,000
- 10.8% on the first $31,843 of taxable income, +
- 12.75% on the next $36,978, +
- 17.4% on the amount over $68,821
- 9.68% on the first $41,675 of taxable income, +
- 14.82% on the next $41,676, +
- 16.52% on the next $52,159, +
- 17.84% on the next $18,872, +
- 20.3% on the amount over $154,382
Newfoundland and Labrador
- 8.7% on the first $36,926 of taxable income, +
- 14.5% on the next $36,926, +
- 15.8% on the next $57,998, +
- 17.3% on the next $52,740, +
- 18.3% on the amount over $184,590
- 5.9% on the first $42,209 of taxable income, +
- 8.6% on the next $42,211, +
- 12.2% on the next $52,828, +
- 14.05% on the amount over $137,248
- 8.79% on the first $29,590 of taxable income, +
- 14.95% on the next $29,590, +
- 16.67% on the next $33,820, +
- 17.5% on the next $57,000, +
- 21% on the amount over $150,000
- 4% on the first $44,437 of taxable income, +
- 7% on the next $44,437, +
- 9% on the next $55,614, +
- 11.5% on the amount over $144,488
- 5.05% on the first $42,960 of taxable income, +
- 9.15% on the next $42,963, +
- 11.16% on the next $64,077, +
- 12.16% on the next $70,000, +
- 13.16 % on the amount over $220,000
Prince Edward Island
- 9.8% on the first $31,984 of taxable income, +
- 13.8% on the next $31,985, +
- 16.7% on the amount over $63,969
- For Quebec tax rates, visit Revenue Quebec
- 10.5% on the first $45,225 of taxable income, +
- 12.5% on the next $83,989, +
- 14.5% on the amount over $129,214
- 6.4% on the first $46,605 of taxable income, +
- 9% on the next $46,603, +
- 10.9% on the next $51,281, +
- 12.8% on the next $355,511, +
- 15% on the amount over $500,000
Identifying Credits and Deductions
It is important to recognize the difference between deductions and tax credits. Deductions (like moving expenses) reduce the amount of your income which is subject to tax. Tax credits (like tuition fees) are applied directly to your tax payable. If your tax credits exceed your tax payable, you do not pay any tax. Any tax withheld from your income during the course of the year will then be given back to you as a tax refund. Hooray!
Your tax credits are calculated as 15% of your personal amounts. For 2018, everyone gets a basic personal amount of $11,809. So, if your taxable income (which is taxed at 15%) is less than $11,809 (for which you get a tax credit of 15%), you will not pay any tax. If you have employment income, you will also get a Canada employment amount of $1,195 and tax credits for your CPP contributions and EI premiums.
The tuition amount is the king of tax breaks for students! So, every student should track down their T2202A form, which outlines tuition fees paid that year. Don’t need to use the full amount of credits this year? The unused portion can be transferred to a parent or grandparent or hoarded until after graduation, when extra money in the form of a tax refund is much needed.
Did you move more than 40 kilometres to attend school or get a summer job? If so, there could be the opportunity to expense transportation and storage, travel, temporary living, and more. However, there are some restrictions to keep in mind. For example, if you are claiming moving expenses to attend school, they can only be claimed against taxable scholarship income, but most scholarship income is not taxable.
Overall, it’s important to track your income and expenses (tuition fees, moving expenses) to stay organized during tax season and ensure you get what’s yours! Our tax experts are always available to help answer any outstanding questions you may have and maximize your return. If you are doing your taxes yourself, H&R Block provides an online tax software or pop by one of our locations with any questions you may have!