Archive for April, 2014

You are currently browsing the Evelyn Jacks Blog blog archives for April, 2014.

Employees at Risk for Missing Deductions and Tax Planning

The average tax refund in Canada is now over $1620 – and that means millions of dollars of overpaid taxes are being taken out of the hands of average people all year long. At particular risk are employees.

Be sure all eligible tax provisions have been applied; here are two issues often forgotten:

Don’t miss employment deductions. If you get a T4 slip and are required to pay out-of-pocket expenses as part of your employment contract, a deduction may be possible on your tax return.

Here’s the catch: you must be required to pay your own expenses under your contract of employment and the employer must certify this on Form T2200 Declaration of Conditions of Employment.

Lots of taxpayers forget to claim back the GST/HST paid on tax deductible amounts using the GST370 Form. Expenses can include accounting and legal fees, motor vehicle expenses, travel costs, parking, supplies used up directly in your work, office rent or certain home office expenses as well as amounts paid to an assistant, which could be a family member.

If you missed this claim, file an adjustment to your prior filed returns and remember to be prepared to show receipts, auto distance logs and Form T2200 if audited.

Minimize tax on severance. If you’ve lost your job, your severance package can help but it can also put you into a high tax bracket because it’s usually paid in a lump sum. One way to reduce your taxes is to maximize your RRSP contribution. Another is to write off your legal fees if you fought a wrongful dismissal. In some disputes, you qualify for lump sum averaging to reduce taxes.

In any case, ask the HR department to annualize the severance to average down taxes payable for the period. Best to see your tax advisor first, to ensure you keep as much as possible, after tax.

It’s Your Money. Your Life. If you have already received your tax refund, check over your tax return to make sure you haven’t missed making a lucrative claim. If you’re still filing, do claim all the deductions and credits you are entitled to. Then minimize withholding taxes by filing form T1213.

Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition is now available. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management”  Follow Evelyn on Twitter at @EvelynJacks.


Claiming Moving Expenses

It’s crunch time when it comes to tax filing. Most taxpayers will have received all their T slips – T4s, T3s, T5s, etc. and now it’s time to actually get it done.

Whether that’s a do-it-yourself effort or a visit to the tax professional, be sure to claim the deduction for moving expenses if you qualify. It is quite possibly the most lucrative on the tax return.

For example, you may be able to claim real estate commissions paid to sell your home, travelling expenses for your family to the new location, and up to 15 days of temporary living accommodations if you can’t get into your new home yet, as well as the removal expenses themselves.

The deduction is available to employees and self-employed persons who move at least 40 km closer to a new employment or self-employment opportunity within Canada.

In order to qualify, the taxpayer must actively earn a salary, wage, or self-employment income at the new location. Investment or pension income, Employment Insurance, or other income sources are not deemed as qualifying income for the purposes of claiming moving expenses. Except for taxable student awards, income sources must be actively earned.

What this means is that if you are unemployed and move to get a job in another province, you’ll have to earn qualifying income against which moving expenses are claimable. Those who move and retire will need to get a job or start a business, at least for a little while, if they want to have qualifying income against which to deduct moving expenses.

It’s Your Money. Your Life. Moving expenses can be lucrative. You’ll need the receipts to be audit proof, but the extra cash will be worth it. Be sure to make the claim on Line 219 and Form T1-M Moving Expenses Deduction.

Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition is now available. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management”  Follow Evelyn on Twitter at @EvelynJacks.