Hello everyone! I know you won't be filing taxes for a few months yet. However, you'll also be busy with classes and maybe even be in full-on exam mode next spring, so let's take a look at taxes for students while you have the time. Hopefully this quick overview will be useful, whether it's your first year at college or you're a seasoned post-grad. And I haven't forgotten about the international students! If you're working in Canada while going to school, most of this post will be relevant to you. Be aware that there are specific rules that may apply to you, though. I'll make a special post just for you in the future. I'll also make a special post for students in the trades so I can cover the grants available to you in more detail.
What kind of things can I claim?
Well, the answer to this is sometimes disappointing for your average student. Canada Revenue got rid of the education and textbook tax credits in 2017. So while you can claim your tuition, you can't claim textbooks, parking, entrance fees, equipment or lab fees. Here in BC we still have a provincial credit we can claim for tuition, but some provinces (I'm looking at you Alberta, Saskatchewan, and Ontario) no longer have a provincial credit. Students who are resident in those provinces can only claim the federal tuition amount.
The only time you can claim equipment and lab fees is if you've received a research grant and you paid those fees as part of your research. You can also deduct travel expenses (transportation, meals, and lodging) and any fees paid to a research assistant,
Your tuition must be paid to a post-secondary educational institution (a college or university) in order to be claimed on your tax return. Tuition can also be claimed on your return if you've paid for a course to make yourself more employable. A couple examples of a person making themselves more employable are someone taking a Class 1 driver training program to get a new job and a nurse taking a foot care course to broaden their skills. If you're taking a course like that, check and see if the institution you want to take it at is certified by Employment and Social Development Canada. If it's not certified, you can't claim the tuition.
A deduction that gets mentioned a lot for students is moving expenses. This one is a little misleading, though. You can only claim moving expenses if you're a full-time student, and you can only claim moving expenses against scholarships, bursaries, fellowships, academic prizes, and research grants. The most common of those types of income are scholarships and bursaries, and if you're a full time student (or a part time student with the Disability Tax Credit) that income typically doesn't get reported on your tax return anyway. So really, for the vast majority of students, you're only going to be claiming moving expenses if you moved and got a job while going to school. Then you can claim the moving expenses against your employment income.
One more thing that students can claim is the Canada Training Credit. The amount you can claim is set by CRA, so you need to check last year's Notice of Assessment or look on your CRA My Account to see how much you're eligible for. Starting with the 2022 tax year, most people will be eligible to claim $750. Before 2022, the usual amount was $500.
Student loan interest can be claimed, although going forward, students in BC don't need to worry about paying interest on their student loans. BC got rid of student loan interest a few years ago and the federal government made a temporary freeze on student loan interest permanent in April of this year. Some of the other provinces still do charge interest on student loans, though. And former students paying off old loans may have accrued some interest that they never claimed. You can claim loan interest going back 5 years.
What information do I need to provide on my taxes?
There are tax slips and types of income specific to students that you'll need to report on your tax return. For general information, take a look at What Documents Do I Need? on the client resources section of the website.
The big one is the T2202 or Tuition and Enrolment Certificate. You might still see this called a T2202A in some places. This is what you'll need to claim your tuition from a post secondary school. If you're taking a course to develop employment skills, as mentioned above, the institution might not issue a T2202, but they should issue an official tax receipt instead. Generally, you'll need to get your T2202 from your online account with your school, although CRA more and more often will have a record of it as well. CRA will not have official tax receipts from other institutions.
Another big one is the T4A slip. If you received a scholarship, bursary, etc., that income will show up on one of these. You will get a separate T4A for each scholarship you received. If you took out a student loan and a portion of it was a grant, the grant will be reported on a T4A. So will any payments from a Registered Education Savings Plan (RESP).
Some types of tuition assistance will show up on a T4E slip, the slip best known for Employment Insurance (EI) payments.
How do I claim my tuition credits?
The first thing to know about tuition credits is that they are a type of credit called a nonrefundable tax credit. That means that they are used only to reduce your tax payable. Tax payable can only go as low as zero, so if your income is quite low and your tax payable is already zero, your tuition credits aren't going to do anything for you. Most of the time, a nonrefundable tax credit can only be used in that tax year. So if your tax payable is zero and you can't use it, too bad - it's gone, wasted. Because students often have very low income and wouldn't be able to use a lot of their nonrefundable credits, that rule would create an unfair situation for them. To avoid that, the government has special rules for tuition credits.
If you can't use your tuition credits in that year or can only use some of them, you can save or carry forward the remainder. These carryforwards never expire, so you need to keep track of them. If you have CRA My Account, you can see how much of your tuition has been used and how much is available for next year. If you don't have My Account set up, keep your Notice of Assessment, which has the amount available to use next year on it.
If you can't use all your tuition credits in the year, you also have the option of transferring a maximum of $5,000 to a parent or spouse/common-law partner. You can only transfer tuition in the current year, though. If you have carryforwards from prior years, those can't be transferred.
You might want to transfer your tuition if you and your spouse or partner have combined your finances. That way, the refund will be available to you that year, instead of having to wait until your income goes up and you can claim your carryforward. If you have separate finances and want to make sure the refund comes to you, it's better not to transfer the tuition and wait to claim the carryforward in a future year.
If a parent paid for your tuition, they might think that they can claim your tuition on their taxes, but that's not the case. Tuition must be claimed on the student's return first to determine the amount eligible for transfer. Be aware that there are specific rules about transferring tuition between provinces. So if your parent lives in a different province than you, make sure you look up the rules for those provinces.
Finding out you're not getting a refund even though you have lots of tuition credits can be disappointing. Just be patient, though. The credits never expire and they don't lose value. Once your income goes up, you'll be happy you had all the credits.
Okay! Hopefully you're still awake 😉 This post ended up pretty long and there's still more I could tell you about filing taxes as a student, but I'll save that for another day.
Good luck in all your classes!