halifax income tax preparation

Tax Tips & Changes For The 2018 Tax Year

The Nova Scotia basic personal amount has increased from $8,481 to $11,481 for individuals with a taxable income of $25,000 or less. The $3,000 increase begins to decrease with taxable income above $25,000 and is eliminated for incomes of $75,000 and above. The age, spousal, and eligible dependant amounts have also been increased.

If you live in Manitoba, New Brunswick, Ontario, or Saskatchewan (unfortunately not in NS) there is now a Climate Action Incentive refundable tax credit available as of January 2018. It is approximately $200 for a typical family.

Medical Expenses: On a yearly basis CRA expands the list of what you can claim as medical expenses for yourself and your family. This year the list has been expanded to include certain “service animals”. Taxpayers are encouraged to periodically check the CRA website for What are the most common medical expenses you can claim - list. As always medical receipts should be combined and put on the lower income spouse’s return in order to maximise returns.

Donations and Gifts: As of January 1, 2018, the first-time donor’s super credit has been eliminated. As always donations can be carried forward for up to 5 years and would normally be combined for spouses in order to maximise total returns as it is a 2-step calculation.

public transit bus creditThe Children’s Arts Amount, Fitness Credit and the Public Transit Credit Amounts have been totally eliminated for the 2018 tax year.

Pensioners should be sure to look at splitting their pension income with their spouse by completing a T1032. This has been one of the biggest tax savings changes made in decades! For Nova Scotians aged 65 and over be sure to be aware of the up to a $1,000 reduction in provincial tax if they can get their income to $23,999.99 or less.

RRSPs: The deadline for purchasing RRSPs is March 1, 2019 if you would like to deduct them on your 2018 income tax return. RRSPs are both a great retirement vehicle and a good way to save for a down payment for a house. Each taxpayer can withdraw up to $25,000 out of their RRSPs tax free to purchase a house and then pay it back over the next 15 years. RRSPs can also be used to finance going back to university through the Lifelong Learning Plan (LLP).

First-Time Home Buyers should be sure to claim the $5,000 non-refundable tax credit and save $750 on their taxes. This applies to houses, mobile homes and condos.

student education creditsTuition, Education and Textbook Amounts: Beginning in 2017 and continuing for 2018 students can only claim their tuition federally as the claim for education and textbooks has been eliminated federally. However, provincially in NS students can still claim both the tuition and education amounts for both full-time and part-time months.

Students should always report their tuition on a S11 and NS(S11) and can still transfer up to $5,000 to a spouse, parent or grandparent. Even if a parent is claiming all of the tuition for themselves it should still be reported on these forms. Students should also be sure to claim any interest paid on student loans.

home tax creditsSale of Principle Residence: Beginning in 2016 and continuing for 2018 taxpayers must report the sale of their personal residence on a Schedule 3 (S3). Failure to do so could result in taxpayers losing their personal residence designation and the resulting tax-free exemption of the capital gain.

Home Accessibility Expense: Starting in 2016 taxpayers may be able to claim up to a 10,000 federal tax credit for expenses incurred in order to make their home more accessible. These expenses are reported on Schedule 12 (S12) and are available to taxpayers who are eligible for the disability tax credit and/or are at least 65 years of age or have someone living with them who meets these criteria (e.g. a senior parent living with their adult children).

teacher tax creditsAmount for Young Children: Taxpayers with children under the age of 6 can claim a NS non-refundable provincial tax credit of $100 per month for each child. This must be claimed on the lower income spouse.

Child Care Expenses: Maximum Child Care Expenses are $8,000 for children under 7 years of age and $5,000 for children aged 7 to 16.

Eligible Educator School Supply Tax Credit: Commencing in 2016 if you are a teacher or hold a diploma or certificate in early childhood education you may be eligible for up to a 1,000 federal tax refundable tax credit for money spent on supplies. A qualifying 1,000 tax credit would equal a $150 tax saving.

Other Changes:

money bags taxman- The Basic Personal Amount has been increased to $11,809.

- The Age Amount for taxpayers 65 years of age and older has been increased to $7,333 with the income threshold above which the amount is reduced increasing to $36,976 at a rate of 15%.

- The Disability amount has been increased to $8,235 and now the form T2201 can be filled out by a nurse practitioner in addition to doctors.

- The EI claw-back threshold has been increased to apply to incomes over $64,625.

- OAS has been increased to $7,121.31 and the OAS claw-back threshold has been increased to apply to incomes over $75,910.

- The maximum Refundable Medical Expense Supplement has been increased to $1,222 and is eligible to taxpayers who have relatively high medical expenses in relation to their income. Please note that medical expenses for both spouses would normally be claimed by the lower income spouse in order to maximize total returns.

- The Working Income Tax Benefit (WITB) has been increased to up to $1,059 for single taxpayers and $1,922 for couples. This is a refundable benefit aimed at lower income individuals and families.

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