Tax Q & A - 2022 Tax Year (Saskatchewan) Taxes can be confusing. We hope some of the questions answered below make things just a little easier to understand.
Tax Q & A - 2022 Tax Year (Saskatchewan) Taxes can be confusing. We hope some of the questions answered below make things just a little easier to understand. I earned only a little bit of money on the side, do I have to report it? If you earned anything where you made a profit, even a few dollars, it’s reportable. If, however, you received some income from an activity where you always spend more than you make you don’t have to report it. Another example where you need not report is where your child or sibling pays you something for living with you, but you receive nothing near what it costs. That’s considered a cost-sharing arrangement. I'm over 18 and didn't make much, if anything. Should I still file a tax return? Indeed you should! Filing taxes will register you for government programs such as the Saskatchewan Low Income Tax Credit ($380), the GST credit ($325) as well as the Climate Action Incentive Rebate ($680). That’s $1385 you could put toward your retirement! I replaced my furnace and filter. Does that qualify for the 2022 Saskatchewan Home Renovation Tax Credit? The furnace qualifies, but the filter doesn’t. Most material improvements to your home qualify, but not maintenance items which would typically be an annual expense. If you renovate your deck, you can claim the screws, but not the impact wrench you bought. Click here for more info. Expenses incurred between Jan 1 and Dec 31, 2022 qualify for the 2022 tax return. Can I claim expenses for my vehicle? If you just travel to your usual place of work and back, none of those expenses are claimable, even if you’re on contract income. So when can you claim costs for running your own vehicle? If you’re an employee, your employer has to fill out form T2200, which declares you had to use your vehicle for work purposes, and you didn’t get reimbursed. Then, you have to keep track of your total kilometers for the year, and the amount you used for work purposes, as well as your fuel, lease, interest, insurance, maintenance, and perhaps depreciation expenses. The same kind of record keeping has to go into using your vehicle for business purposes, but you don’t need form T2200. You can’t just claim a rate per km as CRA may deny the vehicle claim without the detailed record keeping. What do I need to do to claim work at home expenses due to Covid 19? The simplified method is a $2/day credit for each day you worked at home. You must have worked more than 50% of the time from home for at least 4 consecutive weeks in 2022 in order to qualify. The alternate way, is to get your employer to fill out form T2200, stating you had to work at home. Then you may calculate your workspace vs your home area, and track amounts spent on your utilities and internet. Usually the final result is not much different from the simplified method. I know someone who may be entitled to a Disability Tax Credit Certificate (DTC) and I saw an ad about people who can help. Should I use their services? Talk to your accountant first. You will typically pay anywhere from 24% to 30% of any potential refund back to these service providers, which could be thousands of dollars. People who qualify for the DTC typically have difficulty in the functions of life, and ought not to be handing over that kind of money. We think it’s opportunistic. CRA has designed the forms to be quite simple to fill out, and we have enabled many of our clients in this regard as part of our usual tax services. Talk to us first. Why doesn't Amity offer instant tax refunds like other companies? In short, we think it’s a terrible deal for you. If you get an average refund of $1895, you’ll pay $125 for the “privilege” of an instant refund with one of the big tax service providers. That’s 7% hit -- calculated yearly, it’s an interest rate of over 200%. If we e-file your return, you wait just 10 business days and the full refund will be direct deposited in your account. How can I get $2,000 of tax-free income after I'm 65? If you are taxable, and you don’t have any pension or RRIF income (CPP does not qualify), convert $2,000 of RRSP to RRIF. Then, make a RRIF withdrawal of $2,000. That $2,000 is eligible for the “pension income amount”, which is a $2,000 tax credit, essentially offsetting the RRIF income. I submitted medical expenses. Why don't I see them on my tax return? In most cases, medical expenses must reach a threshold of 3% of net income, or, if you’re married, 3% of the spouse with the lower net income. If your net income is $40,000, you would have to spend more than $1200 on medical bills to begin to see the credit apply. Sometimes it makes sense to use a 12 month rolling period including the year prior to reach the threshold. If I earn more, I fear I will hit a new income tax bracket where my taxes will erase what I make. This is a common misconception. While there are different income tax brackets, it is only the incremental income in the higher tax bracket that gets taxed at the higher rate, not all of your income. For example, the first tax bracket in Canada goes up to approx. $50,000. If you make $60,000, the first $50,000 is taxed in the first bracket, and $10,000 is taxed in the next tax bracket. The general principle being, if you make more, you keep more. I am looking to save up a down payment for a home purchase. What's the best way to do that? Watch for the new First Home Savings Account (FHSA) which will be introduced in April 2023. This account will allow you to deposit up to $8,000/year and receive a tax-deduction on those contributions. Further, when you withdraw the funds for a qualifying home purchase, the funds can be redeemed tax-free. This is an excellent way to save up for your first home purchase. More details on the account can be found here: https://www.canada.ca/en/department-finance/news/2022/08/design-of-the-tax-free-first-home-savings-account.html