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It is Tax Season for Canadians! If you lived in Canada for a substantial part of last year, you need to file your taxes even if you didn’t go to work. You have until April 30 2025 to file them. My name is Ginny, I just like money and financial education. Hopefully you can learn that filing your taxes is not as stressful as media makes it seem.
I have a lot of people gripe to me when I bring this up, why do I even need to file my taxes? The government should already know how much income I make and owe them.
My response to that, yeah duh! But they don’t know how you use your money. Tax season is for you to get your finances in order, get as much money back into your pocket as possible. You can be eligible for the GST rebates, carbon tax refunds, and refundable tax credits. It can be as simple as going to university or as astounding as donating 200 hours of your time as a volunteer firefighter. These are tax credits for you! Take advantage of the system, don’t let taxes take advantage of you!
1. Where to File
First things first, if you are a student, are employed by companies (not self-employed), and you generally don’t get many tax slips, DO NOT PAY TO FILE YOUR TAXES. You are young enough that you can just learn to do it FOR FREE.
Do not pass go, do not file at H&R block for $40. Students and people under 25 years old especially get access to paid software for free.
Maybe a thought popped into your head, Ginny that sounds hard. I am here to tell you it’s 100% not. I have filed my taxes myself starting at 18 years old. There is a process called Netfile which lets you file your taxes for free, digitally, from the comfort of your home computer. I am not affiliated with any of these programs.
I started filing for free with TurboTax. I will warn you, it is not for the faint of heart and weak of wallet. They will push any possible angle to get you to pay for their service even if you don’t need it and you need to decline multiple times. I will say they are very thorough though. If you are under 25, it may be a good idea to just see what sort of questions are asked and where you could get credits from.
A program that doesn’t need to route through third parties is GenuTax. You just need to
download the software and just follow the instructions. https://www.genutax.ca/
My current tax software is Wealthsimple Tax. They are straightforward and only ask the bare bones of information. You need to have credits and deduction information on hand if you want to make the most of it. It is quick and streamlined for the people who have simple taxes like the employment tax form (T4) , tuition forms (T2202), and investment forms (T5).
There are more tax programs to consider as compiled by the Canadian Government:
https://www.canada.ca/en/revenue-agency/services/e-services/digital-services-
individuals/netfile-overview/certified-software-netfile-program.html
2. Gather all your papers
Typically you can access these documents through your associated portals or they are
physically mailed to your address. The big places to check would be your school finances, your workplace timesheet portal, banks that you invest at, and so on.
Here is an example:
1. File those taxes!
Do you see the numbers in boxes? When you get to the tax form, you just put the numbers in the right boxes when your tax software asks you. If we use the above as an example, we would need to put 35,000 in box 14, 1874.25 in box 16, and so on until you finish this T4.
If you have more forms, simply keep making new additions and fill out those boxes! Follow the prompts and instructions and it will be finished in no time!
Bonus information:
The long and short of taxes is that everyone gets around $15000 of non-refundable tax credits which means you don’t need to pay any income tax under this amount. You can add to this tax credit by doing things like putting money into a RRSP or FHSA. The money is deducted from your income to make it look like you made less money than you did so you end up paying less tax. This is important for people who might be in between tax brackets.
Canada has a progressive tax system. For example if someone made $65,000 then the first $57,353 is taxed 15%. Any income over that, $7647 in this case, is taxed at 20.5%.
Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-
questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html
There are a lot of ways to get tax credits besides your RRSP and FHSA, some common ones
include:
a. You worked from home
b. Participated on upskilling in a professional program
c. Donated in the past year
d. Participated and paid membership dues like to a union
e. Had a digital news subscription
f. Went to post-secondary school and needed to pay tuition
g. Out of pocket medical expenses
If you choose to invest in an RRSP, you have to know that it is a tax deferred account. It will refund you the tax that you saved by putting it into the account. However, this means that you should INVEST your tax return into the RRSP or other account. You will eventually need to take the money out of the account and you are taxed at least 10% on it. If you can see the math, it means you pay 5% less tax than the lowest income bracket so it's a good incentive. If you don’t reinvest the amount then you lose the tax refund and it’s like why did you invest in an RRSP in the first place?
Nothing is guaranteed except death and taxes :) At least you can make filing taxes easy for yourself for as long as possible!
If you would like a longer in depth walkthrough, the Canadian government has made basic tax return tutorials here. https://www.canada.ca/en/revenue-agency/services/tax/individuals/educational-
programs/completing-basic-return.html
That’s my brief on taxes. Peace out!!
