Whether or not you have most, or part, of your tuition covered, expenses and bills still have the tendency to pile up. However, if you are a medical student there are specific deductions and options available to you.
“Like what?” We knew you’d ask!
While you may not have the income to report on an income tax return, it is still worth doing. You may qualify for a GST/HST credit, a quarterly payment for those with low or modest incomes, and more. You’ll also be able to carry forward certain other tax credits and use them to reduce your taxable income in future years.
Here are some tax deductions and credits that would reduce the amount of tax you pay, either now or in future:
TUITION TAX CREDITS
Apart from tuition fees themselves, you may also be able to claim fees paid for:
- Use of the library or laboratory facilities,
- Mandatory computer service fees,
- Some exam fees may also qualify,
- According to the Medical Council of Canada website, Qualifying Examination Parts I and II exam fees are eligible.
- Certain related fees, such as late fees (up to a maximum total of $250) are also eligible.
To claim the tuition fees, you must obtain one of the following forms from your educational institution:
- Form T2202 – Tuition and Enrolment Certificate
- Form TL11A – Tuition and Enrolment Certificate – University Outside Canada
- Form TL11C – Tuition and Enrolment Certificate – Commuter to the United States
- Form TL11D – Tuition Fees Certificate – Educational Institutions Outside Canada for a Deemed Resident of Canada
Tax Tip: If you are unable to use all your tuition fees in the current year (maybe you haven’t earned enough income), you can transfer up to $5,000 to an eligible person.
INTEREST ON STUDENT LOANS
Med-School is expensive, and most students end up needing some help to cover costs. If you have a student loan from the government – whether it is a loan under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a similar provincial or territorial loans program – be sure you claim the 15% federal non-refundable tax credit for interest paid on your student loans. Interest typically starts six months after you graduate.
Note that interest paid on a personal loan or line of credit doesn’t qualify for the tuition tax credit even if it was used for school.
Tax Tip: If you have no taxes payable for this year, do not claim the interest paid on your current tax return. Instead, claim the tax credit for any of the next five years.
Relocated for school? Well, if you moved at least 40 kilometres for a full-time post-secondary school in the past tax year, you may be able to deduct allowable moving expenses against taxable scholarship or grant income.
Moving expenses can include things such as:
- Transportation and storage costs,
- Travel expenses,
- Temporary living expenses (hotel and/or Airbnb),
- The cost of cancelling a lease, and
- Various other moving-related costs.
If you have moving expenses that you can’t deduct in the current year because you haven’t earned enough income, you may be able to carry them forward to another tax year – just be sure to keep your receipts because CRA likes to ask for proof!
Tax Tip: If you have sold and/or purchased a home because of your move, you may be able to claim some additional expenses.
If you incurred any medical expenses (including dental and eye care expenses) that aren’t covered by an insurance plan, you may be eligible for a credit against any taxes you owe. Depending on your income, there are thresholds to cross before you can claim the tax credit for medical expenses.
Tax Tip: Be careful if you have significant tuition tax credits that you are carrying forward from prior years. You must use those tuition tax credits to reduce your taxes payable before you use any medical expenses, or you will lose the amount of credits you could have claimed.
FIRST-TIME HOMEBUYERS’ AMOUNT
If you were able to buy your first home, you might be able to claim a federal non-refundable first-time homebuyers’ tax credit equal to 15% of up to $5,000 in the year of purchase.
This can result in tax savings of up to $750.
For those students with existing RRSPs, you are also allowed to draw from your RRSPs for the purchase of buying a home. Certain restrictions apply and repayments over the following years are required, for more information on any of these programs reach out to us.
Tax Tip: To qualify as a first-time homebuyer, you and your spouse (or common-law partner) must not have owned or lived in another home owned by either of you in the current or four preceding calendar years. It is also important that you make said new home your principal residence within the first year of purchase.
If you have children, the cost of daycare, babysitters and full-time caregivers is deductible up to certain limits.
Of course, you or your partner would need to have an income to deduct child-care expenses, which can’t be carried forward to another year.
Tax Tip: Childcare expenses are typically reported on the lower-income earner’s tax return however where one partner is a full-time student special rules may apply.
KBH is proud to offer free basic personal income tax returns for medical students. Reach out to us today to learn more!