Yesterday I wrote why it was a good idea to learn to do your own taxes as a student and why it was a positive not just in the short term, but in the long term. The simple reasoning behind this is (to quote a much used personal finance phrase), “No one cares about your money as much as you do.” It’s a basic truth, but one many people never discover for one reason or another.
To be honest, I’m not quite sure why people have such an aversion to learning anything about taxes. There are far worse things that people do for a living. When you consider just how much money some people lose over a lifetime by not staying organized and understanding taxes, it really makes you shake your head. While I was a student I was definitely in this same inefficient group. Getting a regular paycheque and having bills to pay opened my eyes up in terms of how money works. Namely, the fact that those that pay a little attention to where their money goes generally have a lot more of it. If students can learn to take responsibility for their own finances as a young adult they are practicing the financial literacy skills that will serve them well in the future.For Canadian students there are really only 6 or 7 tax rules that they need to take advantage of each year. For most people the end result will not only be a full refund of the taxes they have paid all year, but hopefully some tax credits for the first year they work full-time, because let me tell you from recent experience that they’re nice to have at that point in your life. Without further adieu, here are some time saving tips to stay organized for your taxes as a student.
- Get Organized! You will need the sheet called a T4 (statement of income) from every employer you had during the year. You will also need a document called a T2202A from your place of post-secondary education (lists your tuition amount that is deductible). Other than these two documents you may need some sort of statement of documentation concerning your housing situation and your rent that you paid. Other than this it is a good idea to keep your major receipts, and any receipts from charitable donations etc. Once you get used to keeping it all together it’s not hard to quickly look through once tax time rolls around.
- Keep track of the scholarships and bursaries that you receive. The tax rules concerning these have been changing in recent years and you now have to report them as income using a T4A, but the vast majority of them are still tax free.
- If you have to move more than 40km to attend school most of your moving expenses are tax deductible (meals, mileage, rentals).
- The tax credits for tuition, education amounts and textbooks are non-refundable tax credits and as such can be carried forward for help in future years, or attributed to your parents. If you talk nicely to your parents and their tax man they might even let you at some of the money you’ll be saving them on their taxes. Make sure at the very least that your taxes include these tax credits. Don’t worry about saving the bills from textbooks and stuff, the credits are all based on your number of months as a full time student as defined by your university (at the University of Manitoba for example a full time student was someone taking 18 credit hours in a year).
- If you have recently graduated and had to start paying student loans, keep in mind that the interest you paid on those loans has a tax credit as well. For this reason it might be beneficial to put this money towards other financial endeavours. This subject is much debated upon by financial enthusiasts, but one thing is agreed upon – you’re crazy if you’re paying student loans and not getting the tax break designed to help recent graduates.
As a teacher and recently graduated student I cannot overemphasize the importance in staying organized. The amount of overall time, money, and effort that is saved by people who get into productive habits such as keeping bills in a file folder, or having a container for major purpose receipts is enormous. Now I’m not saying I did this well as a student, but I did make the effort. Learn from my mistakes, and probably the mistakes of many of your friends around you. Save yourself a ton of frustration as you start to get more and more documents in your life to keep track of, GET ORGANIZED!