Taxes aren’t the most exciting topic, but many tax-saving opportunities require planning ahead. Whether you’re just starting your career or well into it, here are 10 tax tips to help you keep more of your hard-earned money.
1. Tuition Carryforward
If you recently graduated from a post-secondary institution, you may have unused tuition credits carried forward from past years. These credits must be used against the current year’s taxes first, and any unused credits can be carried forward to future years. If you took courses to further your education or any certification courses, these might also be eligible to claim against your income.
2. Interest From Student Loans
No one likes student loans, but the interest you pay is eligible for a 15% federal tax credit. You can claim this for the current year or carry it forward up to five years. Just make sure your loan qualifies—private loans and lines of credit don’t count.
3. RRSP Contributions
Contributing to a Registered Retirement Savings Plan gives you a tax deduction and allows your investments to grow tax-deferred. If you’re in a lower tax bracket now, you can carry forward RRSP contributions to use in a future year when your income is higher. As a bonus, you’ll be saving for your eventual retirement. Consider reinvesting your tax refund into your RRSP to compound your savings.
4. TFSA Contributions
While not providing an immediate tax deduction, contributing to a Tax Free Savings Account allows you to eliminate future taxes on investment returns. With this account, your investments grow tax-free, and withdrawals are never taxed, making it a powerful tool for long-term wealth building. If you’re in a lower tax bracket, prioritizing your TFSA over an RRSP might make sense.
5. Charitable Donation Tax Credit
Donations to registered charities get you a 15% federal credit on the first $200 and 29%–33% on amounts above that, depending on your income. You can carry forward unused donations for up to five years to maximize your benefit.
6. Medical Expenses
You can claim medical expenses that exceed the lesser of 3% of your income or $2,759 (for 2024). Eligible expenses include dental work, medical supplies, and even some medical travel costs. You can also combine family members’ expenses to maximize your credits. You can claim eligible medical expenses paid in any 12-month period ending in the tax year for which you’re filing, as long as they have not previously been claimed.
7. Moving Expenses
If you moved at least 40 km closer to a new job or post-secondary institution, you may be able to deduct moving expenses. This includes costs like moving trucks, temporary accommodations, real estate commissions, and legal fees. These expenses can only be deducted against income earned at your new location.
8. Home Office Deduction
If you work from home, you may be able to deduct home office expenses such as utilities, rent, internet, and office supplies. To qualify, your employer must provide you with a T2200 confirming that you were required to work from home. You’ll need to calculate the portion of your home used for work, typically based on square footage, and expenses can only be deducted against employment income.
9. First-Time Home Buyers’ Tax Credit
If you recently bought your first home, you can claim a $10,000 non-refundable tax credit, providing up to $1,500 in tax savings. To qualify, you (or your spouse/common-law partner) must not have owned a home in the past four years.
10. Reduce Your Tax Withholding
If you always get a big tax refund, you might be overpaying taxes throughout the year. Filing a T1213 form lets you reduce tax withholdings on your paycheque, so you get more money upfront instead of waiting for a refund. Just be careful—ensure you’re not underpaying and risking a tax bill.
Final Thoughts
Many young professionals miss out on tax savings simply because they don’t know what they qualify for. Taking the time to plan now can mean thousands of dollars saved over the years.
