It’s officially tax season, and that probably means a nice-sized tax refund is in your very near future. And if you’re like most Canadians, the refund you’re expecting is probably upwards of $1,500. To make the most of tax season, maximize your refund and get the money you deserve, there are a few crucial tips to remember. Most tax advice is geared towards year-end donations and the subtle shuffling of money to various accounts. Luckily though, the ability to save money with your taxes doesn’t end on New Year’s Eve. In fact, the true money-saving hero is shockingly simple: deductions. Whether you file your taxes yourself or hire a professional, it’s important to remember these tips:
Your children may save you money!
Children are one of life’s biggest joys, but they are also one of life’s greatest expenses. With an average cost of $13,630 per year, children are far from cheap, and that’s why it’s even more important to file your taxes accordingly. Tax season is the one time of year when your children may actually earn you money. It’s a shockingly fun twist and it is a tax deduction you definitely don’t want to miss. Known as the “child tax credit,” the deduction will net you $1,000 per child in your care who is under the age of 17. Um, yes please!
Learn about education deductions
Speaking of children, did you know that you could deduct educational expenses on your taxes too? Whether you paid for child’s college tuition or squirrelled away some cash into a 529 College Savings Plan for your future genius, you can claim educational expenses as a tax deduction. But that’s not all. If you or your spouse were in school last year, you may qualify for an educational tax deduction as well. Last year I saved nearly $1,200 by claiming my tuition expenses on my taxes. It was painless and fast, but more importantly, I was able to keep a nice chunk of change in my bank account where it belonged.
Get a break on your mortgage
Are you homeowner? If you answered yes, keep reading. All mortgage payments are tax-deductible. Yep, you heard that right. Your mortgage payments will afford you a tax break. As someone who is currently a renter, this sounds like a dream come true. We all have to pay for somewhere to live, but homeowners get a nice little tax break on the place they call home. On behalf of all the renters in the world who can’t, be sure to take advantage of this amazing benefit!
Hospital bills may make your tax return healthier
Nothing is fun about being sick or undergoing surgery. You feel like crap, your health is at risk and it often ends up costing you a boatload of money. The only good news about being sick is that your medical expenses are tax deductible. Depending on the state of your health last year, this could save you anywhere from a few hundred to thousands of dollars. You already went through the pain of being sick and navigating the healthcare system. Now is your time to reap the only reward that accompanies health issues: a tax break.
Remember to pay yourself first!
The number one way to save money this tax season is shockingly simple: save your refund. I know how hard it can be to save your refund with all the temptations that await (Free money! Vegas! New clothes!) The truth is that there’s nothing wrong with using part of your refund for a small treat. But if you’re serious about getting your finances in order and living a life of financial freedom, then save the crap out of your refund. My favorite way to approach refunds is the 10% rule. With the 10% rule, 10% of your refund is free money with no strings attached. The rest of your refund is for debt payments or savings. If 10% sounds too strict, feel free to play with the numbers a bit and find something that feels more comfortable. The most important part of the 10% Rule is that you are saving the majority of your refund and having fun with the rest. It’s a win-win.
Happy tax season, friends! What do YOU plan to do with your refund?