There’s a Credit for That
How life’s milestones affect your taxes
You owned it in 2018. It was a big year for you, and big changes in your life can mean big changes to your taxes. New home, new baby or new marriage? Most major life milestones mean qualifying for new tax credits and deductions. Go you!
Change in relationship status?
Whether you’re in a common-law relationship, recently got married or it’s … uh … complicated, your relationship status can impact your tax refund. Keeping the Canadian Revenue Agency (CRA) up to date on your current relationship status is important. Make it official with the CRA by filling out the RC65 marital status change form, which you can do in an H&R Block office.
If you are married or considered common law – which means you have been living at the same address with your partner for twelve consecutive months, or are parents of a child – certain credits and deductions will be calculated based on your total household income, opposed to your personal income. These credits include the GST/HST credit and the Canada Child Benefit (CCB). Your new marital status could also allow you to pool your receipts together for charitable donations and medical expenses to max out their tax savings.
Eating for two?
Congratulations on the addition to your family! Whether you are adopting, expecting, or trying to get pregnant, there are tax implications you should be aware of. Take a break from researching baby names and familiarize yourself with your new tax situation.
• The cost of reproductive technologies (such as in vitro fertilization) can now be claimed as a medical expense by individuals who may not be medically infertile, but need medical intervention in order to conceive. Typical examples would be same-sex couples and singles.
• Parental leave: A new EI “parental sharing benefit” provides an additional five weeks of benefits when both parents agree to share parental leave.
• Take advantage of tax benefits – The majority of parents in Canada are eligible to apply for the Canada Child Benefit (CCB), a tax-free monthly payment to assist with the cost of raising children. At the hospital, you will likely state on the birth registration form that you consent to sharing information with the CRA, otherwise you can download form RC66 and send to the CRA yourself.
• RESP – It’s never too early to start thinking about college. Opening a Registered Education Savings Plan (RESP) is a great way to save for your child’s post-secondary education. Plus, deposits into an RESP can qualify for matched dollars through the Canadian education savings grant.
From renter to buyer?
Say goodbye to those rent payments and hello to new tax credits and that white picket fence. If you’re buying a home for the first time, you can take advantage of the First-Time Home Buyers’ Tax Credit (FTHB), a $5,000 credit, which works out to $750 in tax savings. You can also tap into your Registered Retirement Savings Plan (RRSP) to help with your down payment through the Home Buyer’s Plan. The amount you can borrow tax-free from your RRSP has now been increased from $25,000 to $35,000. If you and your spouse each have an RRSP, you can both borrow $35,000 from your own accounts. But remember you are only borrowing it – you have two years before you have to start repaying it.
So, there you have it, a big year in 2018 could mean a big tax refund. Be sure to think of all the major events from the year to ensure you are taking advantage of credits and deductions available to you.