End of Year 2009 Tax Tips
· Home Renovation Tax Credit: The deadline is January 31, 2010. Canadian home and condo owners can get up to $1,350 back on lasting or integral renovations. If you are going to do it yourself, make sure you buy your materials before the deadline. If you hiring a contractor be sure the work is completed before the deadline.
· Employment Insurance (EI) Benefits: Stats Canada estimates more than 800,000 Canadians collected EI this year. For taxpayers collecting EI, they may want to review their tax obligations before the end of the year. In most cases, EI only withholds 10 percent back for tax purposes which is less than the lowest tax bracket. If the taxpayer collecting EI earned any other income in 2009, they could be facing a tax bill when they prepare their return next year.
· Moving to start a job in a different province? Check the provincial tax rates before deciding the moving day. You are subject to provincial tax in the province where you reside on December 31. So if there is a substantial difference in the tax rates, you may want to either speed up or defer the move.
· Getting married? You file your taxes based on your marital status on December 31. So if you want to claim your new spouse as a dependent on your 2009 return, you can claim them for the full year even if you are married on New Year's Eve. Just make sure you say your vows before midnight.
· Making a difference: If you want to claim a charitable donation on your 2009 tax return, you have to make it before December 31. If you have already made more than $200 in donations in 2009 it will also be worth a 29 percent federal credit instead of the 15 percent for donations under $200. The good news is that now you can donate publicly-listed securities to registered charities or private foundations without being subject to capital gain taxes.
· Saving for Higher Education: With tuition costs rising, many parents and grandparents want to take advantage of the government's Canada Education Savings Grant (CESG). You must make a contribution to your child's Registered Education Savings Plan (RESP) before December 31. The lifetime RESP contribution limit is $50,000 with no annual contribution limit. Annual CESG matching contributions are increased from $400 to $500.
· Pooling medical expenses: If you have an expensive trip to the dentist coming up, you may want to consult a calendar. Medical expenses can be claimed in any 12-month period ending in 2009 so it could be beneficial to try to fit known medical expenses into the same 12-month period in order to maximize your claim. You don't actually have to go to the dentist but if you have an outstanding amount, try to pay the bill by the end of the year. Remember, medical expenses are reduced by a percentage of your income. So the greater their dollar value, the likelier it will be that you can make a claim.
· Review your stock portfolio: The markets did gain some ground in 2009 but many people are still facing capital losses on their investments. It is a smart strategy to review your portfolio before the yearend to see if you can find a tax advantage in taking a loss or cashing in a gain. Capital losses can be carried back three years or forward indefinitely.