Most people only think of income tax in March or April, but it’s a year-round process and deductions can come at any time of the year, even in the summer months. Here are some common summertime tax credits or deductions:
- Children’s Fitness and Arts Tax Credits: If you signed your kids up for swimming lessons or art classes during the summer months, be sure to keep your receipts so you can claim the expense at tax time. The group organizing the activity will know if the session qualifies for the fitness or arts tax credit.
- Moving for work: The summer is a popular time to move and the costs may be a tax deduction if you move more than 40 kilometres for work. Mileage, temporary accommodations, real-estate fees (on the sale of your old house) and movers are just some of the expenses that can be claimed. Make sure you keep all your receipts. Claiming moving expenses can add up to major tax savings, but this is one expense that is often reviewed by the Canada Revenue Agency.
- Summer BBQs: If you are self-employed and take time in the summer months to invite clients and potential customers over for a BBQ, you can claim 50% of the cost as entertainment expenses. However, if you are spending your time on the golf course with clients, your green fees are not eligible, even if you talked about business the entire time, but food and drink after the game can be claimed.
- Buying your first home: First-time homebuyers enjoy a $5,000 non-refundable tax credit when they buy their first home; that translates into $750 in tax savings. You do not need to have specific receipts to make the claim, but you must be able to prove you bought a home in 2013 if the CRA asks.
- Working for the summer: Students may have found full-time employment during the summer months to earn some extra cash. Make sure your summer employer has a permanent mailing address so it can send your T4 in early 2014. If tax was withheld from your paycheques during the summer and you earned less than $11,038 in 2013, you should receive this money back when you file your tax return.
Understanding what you can claim will help when it comes time to file your tax return. Compiling receipts or slips into one file or envelope means you will have all the important tax paperwork for the year in one place when it comes time to file.