New and Existing Tax Credits, Expenses and Deductions to Maximize your 2022 Tax Filing

Tax season is in the air and the ladies of SheDo Tax Company are preparing for a busy season! Now is the time to focus on gathering and organizing all your documents, slips and receipts in order to prepare and be aware of all the information you need to reduce your 2022 taxable income as much as possible.

This year, because April 30th falls on a weekend, the deadline to file your T1 personal income tax return is Monday, May 1, 2023. If you or your spouse are self-employed, the tax filing deadline is June 15th, 2023. Although, if you predict a balance owing, payment is due May 1, 2023 for all individuals.

We have compiled some new and existing income tax credits and deductions to review and help you maximize your 2022 income tax refund. Get ready and hold on tight, there is a lot to cover!

Maximizing Your Registered Retirement Savings Plan (RRSP) Contributions
We always like to remind our clients in the new year to top up those RRSPS by March 1st! One of the most efficient ways to decrease your 2022 tax liability is contributing to a RRSP. Any new money you deposit into an RRSP account during the first 60 days of 2023, can be used as a tax deduction for your 2022 T1 income tax return IF you have available RRSP Deduction Limit room. If you expect to owe, RRSPs could assist in lowering the amount you need to pay to the Canada Revenue Agency (CRA), and in return also help save for your retirement.

Work From Home Employment Expenses
If a condition of your employment is to work remotely in 2022, you may be able to claim employment expenses. To claim the detailed method you will require a T777 – Statement of Employment Expenses Form to calculated your expenses and a T2200 – Conditions of Employment form signed by your employer to validate your claim. It is important to note that salaried employees and commission employees have different eligible criteria when claiming employment expenses. You can not claim a deduction for expenses reimbursed by your employer.

For the 2020, 2021 and still for the 2022 tax year, there is the simplified credit of $2/day to a maximum deduction of $500 that you may claim on a T777s – Statement of Employment Expenses for Working at Home Due to Covid-19 that may apply to you.

First Time Home Buyers Credit
Attention all first time home buyers! The First Time Home Buyers Credit has increased to $10,000 for the 2022 tax year. This would provide first time home buyers with a refundable credit of $1,500, up from $750. You are eligible for this credit if you have purchased your first home in 2022.

Charitable Donations
Don’t forget your donation receipts! Donations are flexible in the way that if they are not needed to lower your taxable income in 2022, they can be carried forward for up to 5 years. Donations can also be optimized by either yourself or spouse.

Medical Expenses
Now is the time to start gathering your medical and dental receipts from the pharmacist, dentist, chiropractor, optometrist, massage therapist, or any other eligible medical practitioner. In order for your expenses to be deductible, the total of your expenses must exceed 3% of your net income or be more than $2,479. Medical expenses for children and spouses can be combined together and claimed under one taxpayer. You may claim eligible medical expenses paid in ANY 12 month period ending in 2022 and not claimed in 2021.

Tuition Fees and Tuition Carry Forward

Tuition fees for 2022 and tuition carry forward amounts from previous years are available to students who have incurred tuition at a post-secondary education institution. This will be a deduction available to the student if they have taxable income. They are also eligible to transfer up to $5,000 in the year the tuition was paid to a supporting parent or spouse. However, If any tuition is carried forward, the carry forward amount is no longer eligible for transfer. All tuition carry forward amounts should be found on your previous year Notice of Assessment, or you can locate on your CRA myaccount.

Child Care Expenses
If your child was in a home or public day care setting while you attended work, ensure that you gather and apply all your child care receipts for 2022. Remember this may also includes amounts paid to day camps, summer camps, sleepaway camps and before and after school care. Child care expenses are applied to the lower net income spouse.

Moving Expenses
Individuals who move due to specific job relocation, run a business or move to study courses as a full time student in a post secondary program, may be able to claim expenses related to the move IF their new home is 40 kilometers closer to the new work location or school. These expenses may include but not limited to: travel costs, real estate and legal fees associated with buying or selling a home, temporary accommodations, and packing/moving expenses. Ensure you meet CRA’s outlined eligibility before considering this deduction.

Designated Immediate Expensing Property (DIEP) for Small Business Owners
To assist small and medium-sized businesses across Canada in recovering from the pandemic, the federal government introduced new CCA measures with respect to certain newly acquired capital assets. The immediate expensing rules allow eligible businesses and partnerships to acquire capital assets and immediately expense them in the year they are ready for use, up to the $1.5 million limit. Eligible property consists of all depreciable capital property other than property in CCA classes 1 to 6, 14.1, 17, 47, 49, and 51. Longer-lived assets such as buildings or goodwill are excluded from the immediate expensing rules.

Ontario Staycation Tax Credit
The Ontario Staycation Tax Credit is a one-time offer for Ontario residents to spend money in Ontario on tourism and hospitality. This credit is available to ALL Ontario residents, regardless of age or income and may can claim 20% of their 2022 accommodations, ranging from hotels to vacation rentals and campgrounds. The maximum claim for this tax credit is $1,000 for an individual, or $2,000 for a family, which means a maximum of money back in your pocket of up to $200 or $400. Only one family member can make this claim. Ensure to have your receipts/invoices on stand by in case CRA ever asks to see them.

These credits, expenses and deductions are not limited to all that may be claimed. Be sure to also claim any eligible Disability Tax Credit, Professional-Union-and Other Type Dues, Eligible Support Payments Paid, repayment of Covid-19 …to list a few more.

It is important to note that if you qualify for the Canada Workers Benefit (CWB) for 2022 (formerly known as the Working Income Tax Benefit (WIB)) and just like the Climate Action Incentive Payment (CAIP), it should start to be an advanced quarterly payment throughout the year as of July 2023 (still pending as of the date of this post) . In order to receive this benefit and payment as well as any Goods and Services/Harmonized Sales Tax (GST/HST) Credit, Child Tax Benefit (CCB) and the Ontario Trillium Benefit (OTB) you MUST file your 2022 T1 income tax return.

If you have any questions regarding any of the tax deductions and credits listed above, please feel free to give us a call at 289-758-9501 or email hello@shedotax.ca.

We look forward to serving our clients again this tax season!!

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