Tax Tips for Parents with Kids with Disabilities

Our friends at Turbotax (who gave me those Free Copies of Turbotax) had one of their associates tax expert and personal finance consultant Robin Taub send me a few Tax Tips for families with disabled family members .

Answers

Some Answers for Parents with loved ones with disabilities.
(Image courtesy of Stuart Miles, at FreeDigitalPhotos.net

Here are a few of her tips:

Some important points to remember, remember to take advantage of all the tax credits that you can, it is your money to have. Remember to check out my RDSP page where this and many other helpful posts like this are archived.

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Tax Time! TurboTax Giveaway

Yes, it’s that time of the year, where the Tax man is beefing up their Helpline, RRSP vendors are out for your last buck, and financial bloggers like me give you useful tax tips, in Canada, it is Tax Time!

This is the season when folks like Mark over at the Blunt Bean Counter earn their money, and I start getting odd e-mails about whether you can claim your dog as a dependent (the simple answer is NO! you cannot).

Tax Time

Tax Time

How better to celebrate this festive season than a Turbotax (on-line) giveaway. What is Turbotax on-line? Here is a helpful blurb about the software:

With TurboTax Online or ImpôtRapide en ligne, you prep your taxes and pay at the end, when you’re happy with the result and ready to NETFILE. 

As this is Canada, I like to stick with the concept that contest winners need to answer a skill testing question, or have to do something (I don’t give stuff away for free, just ask my kids).

This year we have a simple question that, you must answer in the comments of this article, by February  6th to be considered for this free software (I am giving 3 codes away).

Question: The stupidest thing I ever left off my tax return was _____________
(fill in the blank)

The winner will be chosen (at random) from the entries that qualify (i.e. you can’t just put in, “GIVE ME THE  SOFTWARE” and be considered).

NB: You must supply a valid e-mail address or your entry will not qualify.

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Splitting Income For Single Income Families

One of the earliest articles that I had on-line (back in 2005) was that the Canadian Government Hates Single Income Families, and I still feel that the Government really isn’t trying to help out single income families. The set of articles was a bit inflammatory (as I was want to do in those days), but the point about Income Splitting still is an interesting discussion point.

My guess is that the Government does not want to change the tax system to allow Income Splitting, for a lot of reasons, but one of the biggest reasons is they don’t want to cut one of their income streams down  (this is not me putting on my Aluminum Foil hat and claiming this is a government conspiracy, just that it is only good business sense to not decrease your incomes, especially when you carry as much debt as all levels of government currently do).

I have written about the joys of income splitting for the retired folks out there (who have pension income), but a family with a single bread-winner (who isn’t retired), is not extended that same privilege. Typically a single income families’ major tax breaks are (assuming there is a spouse or common-law partner involved):

  • Schedule 5: Line 303 where you can claim up to $11038 (minus whatever your spouse’s net income comes out to)
  • Family Care Giver credit, if you are taking care of a disabled family member

That is pretty much it. With lower incomes you may be able to claim medical expenses and such, but that is about it.

The concept of a Household Income, that can pool two folks’ income into one and then split in half (for tax purposes) sounds fair to begin with, but evidently the CRA and the Government are not in agreement on that. Think about:

  1. Lisa is a designer and earns $80,000 a year, while her spouse stays at home with the kids
  2. Gunther earns $45K at his job and his spouse earns $35K at her (or his) job, and they have their kids in daycare
Inequal Tax Solutions

Only in the Tax World is this statement True

At first blush you’d think that these two families pay the same taxes, wouldn’t you? However, we know that this is not how the tax system currently works, and that in fact, Gunther and his spouse have a higher net income because they both earn in a lower tax bracket, whereas Lisa is taxed in the higher bracket for that part of her income (remembering that the tax brackets have graduated income levels).

Is this right? My opinion is no, but then again, Mrs. C8j and I lived in a scenario where she stayed at home with the kids, and I worked, so naturally I would be more inclined to think a Household Income or Income Splitting would make more sense.

I am curious to hear what my readers think of how the Canadian Tax system treats dual-income families as compared with single-income families.

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Tax Fun: Moving Costs for Students

Today (April 30th) is usually the last day of the lease for students, especially those about to graduate.

The trick most landlords get students to do is to sign their lease so that they must pay for the summer months if they want the rental for the next school year (and except in a few University towns, there is little chance of subletting those rentals), thus their lease usually ends on April 30th.

The one thing for those graduating students to remember is that if they are moving out of their University living quarters and are moving to a new city to get a job, that is a moving expense, that is deductible (unless  your employer reimburses you for it, then it also becomes income too).

Graduates Moving

Graduates Moving Costs

What does the CRA say exactly about this?

Who can claim moving expenses?

If you have moved and established a new home to work or to run a business at a new location, you can claim eligible moving expenses.

You can also claim moving expenses if you moved to take courses as a student in full-time attendance enrolled in a post-secondary program at a university, college, or other educational institution.

To qualify, your new home must be at least 40 kilometres (by the shortest usual public route) closer to your new place of work or school. Complete Part 2 of Form T1-M to determine if you meet the distance requirement to claim your moving expenses. If the result on line 3 is less than 40 kilometres, you do not qualify to claim your moving expenses.

You must complete a separate Form T1-M for each eligible move and enter on line 219 of your return, the total of all amounts from line 23 in Part 4 of each form.

Can you claim this every year if you move back home and then back to school? I don’t think so, however, if you graduate from one school and then start at a new school (in a different city) that might be a very different story.

Oh and your taxes are due very soon as well!

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Tax Haiku

I spent today finishing my taxes, and this is where my brain ended up, with an Income Tax Haiku:

Tax time coming soon,

Ensure all credits are there,

I keep my money 

Keep that in mind doing your taxes

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