Articles

Passing on Wisdom And Teaching Responsibility

First Posted: September 11, 2009

By Bennett Gold LLP, Chartered Accountants

1 2 3 Next

E-mail this article to a Friend!

Labour Day is just around the corner and then it's off to college, university or some other post-secondary education for many kids.

As your children prepare to leave home and take on more responsibility as adults, it's a good time to help them understand their tax obligations and the credits and deductions that are available to help them – and you. (See page 4 for guidelines on teaching your children about credit cards and money management.)

First, students – as well as their parents or other supporting adults -- should have a clear understanding of what sorts of income is taxable. Of course money earned from a full-time or part-time job that exceeds $10,320 in 2009 is taxable.

But students may have other sources of income and some of that is tax-exempt. For example, scholarships, fellowships, bursaries, and achievement prizes are tax-free provided the students are enrolled in programs eligible for the education amount. Otherwise, only the first $500 is exempt.

Money earned as a teaching assistant is taxable as are research grants. In the case of grants, students may deduct costs related to the research, such as travelling expenses, lodging and fees paid to assistants.

Once you have the taxable earnings issue down, you'll want to know how to lower those taxes. Here is a guide to the credits and deductions that can help you and your student lower your tax bills:

Tuition Credits

Full-time and part-time students can claim a federal tax credit on eligible tuition fees, which generally include all mandatory amounts charged by post-secondary institutions. The costs of room and board or student association fees are not eligible. Most territories and provinces offer similar tax credits.

Education Amount

On top of the tuition credit, students can claim an education amount of $400 a month for each month (or part of a month) that they are enrolled full-time. Most territories and provinces also offer an education amount.

Students enrolled part-time may be entitled to an education amount of $120 a month. To qualify, the program must last at least three consecutive weeks and involve a minimum of 12 hours of courses a month.

Students can claim the full $400 federal education amount if they can attend qualifying courses only part-time because of a mental or physical impairment and are eligible for the disability tax credit.

1 2 3 Next

E-mail this article to a Friend!

Coupons Deals Expired Deals Features Freebies Forums Links Retailer Ratings Marketplace Canadian Price Comparison