Students tend to qualify for various tax credits. The primary ones are tuition, education and textbook tax credits. Think of these separately. You may also qualify for credits paid against student loans, moving costs and child care. Rent paid may also qualify for the provincial tax credit.
What if you only took a course to upgrade your skills? You may qualify. Take a look at Tuition.
Transportion may also be deductible.
How does scholarships and bursaries and RESPs get taxed?
What if I want to use my RRSPs and go back to school?
If you are 16 or older at the end of the year, and your course was taken at a post-secondary level, you may qualify. The course must develop or upgrade your skills in an occupation. It must be paid to a Canadian educational institution. And the cost must be more than $100. A course will qualify whether it is a full-time day course, night course, summer course or correspondence course.
You cannot claim things like student association fees, transportation, parking, meals, lodging, computers, books, CDs, or DVDs, (other than books that are included in the total fees for a correspondence course).
You cannot claim the deduction if the fees were paid or reimbursed by your employer.
The education tax credit is based on your enrollment in qualifying educational programs. You are entitled to claim $400 for each month of full-time studies during the year and $120 for each month in part-time studies. You can claim only one education amount for each month, the full-time amount or the part-time amount.
The school must provide you with one of the following forms in order to confirm the period in which you were enrolled:
Education and Textbook Amounts Certificate
Tuition, Education, and Textbook Amounts Certificate
Tuition, Education, and Textbook Amounts Certificate - University Outside Canada
Tuition, Education, and Textbook Amounts Certificate - Commuter to the United States
If your employer paid or reimbursed you for the course, you do not get to make the claim.
If you are able to claim the disability amount, you may claim $400 for each part-time month you were enrolled. Even if you could not make the disability claim because your claim was not severe and prolonged, you may claim the $400 per month of part-time studies. You will have to support this claim.
Only if you are entitled to claim the education amount, you can claim the textbook amount. You are entitled to claim $65 for each month you qualify for full-time studies and $20 per month for each month of part-time studies. Again, you may only claim one textbook amount for each month.
Receipts are not required.
Interest on student loans is tax deductible. However, it must be received under a) the Canada Student Loans Act, b) the Canada Student Financial Assistance Act, or c) a similar provincial government law for post-secondary education.
Only the student can make the claim. The student has five years to make the claim.
Don't be fooled by regular bank loans, student lines of credit, student credit cards, loans from outside Canada, etc. These do not qualify. Also, if you combine your student loan with any other kind of loan, it becomes void.
If you regularly attend a college or university at a post-secondary level AND you are taking at least a 60% course load, you may be eligible for moving expenses.
You can claim moving costs if you move 40 kilometres or more to the educational institution and you have income earned in the new location. You can claim moving expenses when you move back to school after the summer break. Again, as long as you have income earned at the new location.
Evening and correspondence courses do not qualify.
The educational instituion does not necessarily have to be in Canada.
Child Care Expenses
Child care costs are deductible under a variety of scenarios. Being a student is one those scenarios. Normally, the lower income person must pick up the deduction. However, students are an exception, whereby the higher income person may make the deduction.
There are tight rules on this and each case must be looked at on its own merit.
Rent and Residency
If you were 16 or older and a resident of Ontario on December 31, and you paid rent or property taxes, you may be eligible for the property tax credit. If you were under 19, and someone you lived with received the Canada Child Tax Benefit for you, you do not qualify.
If you are in residence, you may only claim $25.
Public transit is deductible. There are some restrictions.
First, the pass must permit unlimited travel on local buses, streetcars, subways, commuter trains or buses, and local ferries.
They must be for at least one month or longer.
If the pass is for shorter durations, such as five days, and you purchase enough to travel at least 20 days in a 28 day period, you are okay.
Electronic payment cards are also okay if used to make at least 32 one-way trips during an uninterrupted period not exceeding 31 days.
Scholarships and Bursaries
Scholarships, bursaries, fellowships may no longer be reported on your tax return. Artist's project grants may fall into this category. If you are able to claim the education amount, they are eligible.
In other words, if you continue with your education using the scholarship or bursary, the amount does NOT get reported on your tax return.
If you do not continue with your education, amounts over $500 must be reported on your tax return.
Monies earned in an RESP are called educational assistance payments (EAPs). You must report EAPs on your tax return for the year in which you receive them. Contributions are not taxed.
Lifelong Learning Plan
The Lifelong Learning Plan (LLP) allows a taxpayer to withdraw up to $20,000 of funds saved within their Registered Retirement Savings Plan (RRSP) for the purpose of furthering their education or the education of their spouse or common-law partner, on a completely tax-free basis. The withdrawal limit is $10,000 per year. No tax will be withheld on such withdrawals. The withdrawals may be a single amount or the taxpayer may make a series of withdrawals as long as the total does not exceed $20,000.
The funds must be repaid back into the RRSP, over a period not exceeding 10 years, beginning in the fifth calendar year after the withdrawal or the year after the student ceases to be a full-time student for at least three months in the year, whichever comes first. Amounts which are due and not repaid are included in the taxpayer's income in the year they are due.
Note: It is not necessary that the taxpayer actually use the funds borrowed for the intended purpose, only that they become a full-time student.
Although student returns are considered "easy", it is in your best interest to see a professional. That's why we're here.