Don’t Miss Out On These 8 Tax Deductions

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With the tax deadline approaching on May 2, many Canadians will be rushing to finish their taxes in the next few weeks. As there are hundreds of deductions and credits, it’s easy to miss out on all the credits and deductions you’re eligible for. That means you’re giving away money that should stay in your pockets instead.

CloudTax is a Canadian online tax filing service that lets you file your taxes yourself, do it with some expert help, or has tax experts that can file your taxes for you. CloudTax’s main mission is to make it easy for you to file your taxes and make sure you get all the deductions and credits you’re eligible for.

Here are 8 key tax deductions and credits you don’t want to miss out on when you file your taxes this year:

Employment Expenses

With everyone suddenly working from home due to the pandemic, the Canada Revenue Agency simplified home office deductions. So, if you worked more than 50% of the time from home for at least four consecutive weeks you can claim $2 for each day you worked from home due to the pandemic.

For the 2021 tax year, the maximum deduction allowed by the Canada Revenue Agency is $500, and you don’t have to keep track of any receipts or expenses – but it is a good idea!

There is also a detailed method for claiming working-from-home expenses – instead of the flat rate method – which may be beneficial if you have more than $500 to deduct.

They must be supported by documents or bills, and you must have a signed form T2200S Declaration of Conditions of Employment from your employer.

CloudTax offers CloudReceipts, which can help you keep track of expenses to back up your claims for tax purposes.

Digital News Subscription Tax Credit

Being a news junkie has its perks! From 2020 to 2024, you are allowed to claim a 15% non-refundable tax credit of up to $500 for what you spend on eligible digital news subscriptions.

The news subscription must be a qualified Canadian journalism organization, such as The Toronto Star or The Globe and Mail or The National Post. Specifically, only the cost of standalone digital subscriptions is eligible – so if the subscription is print and digital you can only use half the amount paid towards the credit.

Moving Expenses

This deduction is particularly important for employees who have relocated closer to their work, college or university students, specifically if they moved to attend school. Your new home must be at least 40 kilometres closer to your new work location or school.

Here are some of the moving expenses you can claim:

• The cost of selling your old home, including advertising, legal fees, real estate commissions or mortgage penalties.

• The cost of a moving van and other travel expenses such as meals and accommodation.

• The cost of cancelling your old lease.

• Charges to change your address on legal documents, replacing your driver’s licence, utility hook-ups and disconnections.

• The cost of maintaining your old residence while it is vacant (up to $5,000) such as interest, property taxes, insurance premiums and heating and utilities expenses.

Make sure you keep receipts in case the CRA asks for documentation of your moving expenses.

Medical Expenses

You probably already know that you can claim certain expenses, such as the cost to go to the dentist, or for prescription medications or glasses. If you have more extensive medical expenses, you can claim it if your doctor signs a form that says they are necessary. Some uncommon expenses that you can also claim are fertility-related procedures, air purifier, furnace, gluten-free foods, or crutches.

But note, you cannot claim expenses you’re reimbursed for, such as through a work health benefit plan. However, you can claim out-of-pocket expenses that you didn’t get reimbursed for and the premiums you pay for private extended health insurance and expenses for your partner or dependents such as kids under age 18.

Disability Tax Credit

The disability tax credit (DTC) is worth about $1,500 for adults, and more for children. If your income is too low to use all the credit, you can transfer the unused part to someone else.

Many taxpayers overlook the disability tax credit because they don’t know that it covers a range of physical and mental conditions. Potentially eligible conditions include anxiety disorders, ADHD, autism, bipolar disorder, diabetes, epilepsy or learning disabilities. The credit counts retroactively for up to 10 years.

However, individuals may be eligible for the DTC only if CRA approves form T2201, the Disability Tax Credit Certificate, which requires a medical practitioner to certify that the person has a severe and prolonged impairment. This process may sound daunting, but it can help you reduce your taxes.

Student Loan Interest

Individuals can claim the interest they pay on both federal and provincial government student loans – but not lines of credit at a bank. As a result, you want to be careful about consolidating student loans into a bank line of credit or you might lose out on this deduction.

You can claim the interest for 2021 or the preceding five years – if you didn’t claim it earlier. If you don’t have much income in 2021 it’s better to not claim that interest now and instead you can carry it forward and apply it on a return in any of the next five years.

Again, make sure you keep copies of documents in case CRA asks you to verify these amounts.

Charitable Donations

Everyone benefits when you donate – the charity, its beneficiaries and you. And those charitable donations can add up. Donations to an eligible registered charity entitle you to a charitable tax credit of 15% on the first $200 (which equals $30), and then 29% up to a maximum of 75% of your income.

Donations to registered charities, and federal and provincial political parties count as charitable donations, among others. CRA lets you compile your donations for up to five years and then put them together on one return so you can get the maximum benefit on your taxes. However, the credit can only be used to reduce the tax you owe; so, if you don’t owe any tax you don’t get a refund.

Carrying Charges

The CRA lets you claim certain carrying charges or interest that you paid to earn income from investments. That includes the flat fees you paid to have someone manage your investments (but not trading commissions). Or you can claim the interest paid on money you borrowed to invest, but not for registered accounts, such as your RRSP. Make sure you keep track of these documents.

The Bottom Line

As a taxpayer, you need to make sure you claim all the tax credits and deductions you’re eligible for. Remember, it’s your hard-earned money so don’t pay more tax than necessary. Taxes can be complicated, but CloudTax aims to make it simple.