Professional Back to School Tax Savings Tips

Did you just drop a bundle on school supplies and performance-enhancing running shoes? Parental peer pressure from the mini-mes can be daunting this time of the year, especially if Mandarin lessons, dance, and hockey all appear on the agenda.

Fortunately financial relief may be only a tax receipt away—so it’s important to keep the right receipts. Astute tax pros are on their toes to help you tap dance back into the black if you feel you’ve missed something. The pay-off is big: you could save thousands per child this year, if you qualify to take advantage of all the tax provisions.

Children’s Fitness Tax Credit. Claimable since 2007, this credit recognizes eligible expenses for sports and fitness activities taken by each child under age 16, up to a maximum of $500. (Parents of a disabled child under 18 get to claim more.)  Some interesting activities qualify—sailing, bowling, and golf lessons, for example, in addition to the more typical hockey and soccer.

You’ll save 15 per cent of every dollar you fork out, up to the maximum limits above. That’s a maximum of $75 for each healthy child. Because this is a non-refundable tax credit, it offsets federal taxes you otherwise pay. No benefit, in short, for those who pay no federal tax.

Children’s Arts Tax Credit. Claim costs for having your child participate in artistic, cultural, recreational or developmental activities. This non-refundable tax credit includes the literary, visual and performing arts, or music or language lessons, too. So do costs of instruction, equipment, uniforms, facility rental and administration costs included in the registration or membership fees.

Expect your refund to grow by up to another $75. Again, that’s a maximum of 15 per cent of $500, used to offset other federal taxes payable. If your child participates in both fitness and the arts, you can make two claims: one for each credit. Not allowed are fees paid for programs that are part of a regular school curriculum. Nor are costs for travel, meals, or accommodation. Be careful to choose programs of the right length, too. Your tax advisor can help you decipher the rules.

Provincial Activity Tax Credits. Both Ontario and Manitoba have activity tax credits. In Ontario, the credit is a refundable one: claim up to $526 paid for each eligible child in an eligible activity. (Double that amount if you spend at least $100 on an activity for a disabled child). You get back 10 per cent of all the money spent on eligible activities, per child, on top of the value of your federal credits. In Manitoba, it’s not refundable . . . you’ll get 10.8% of up to $500 or $54 dollars as a credit against your provincial taxes. For 2012, BC introduced a Children’s Fitness and Children’s Arts credits which are both non-refundable and exactly the same as the amount claimed on the federal return. Nova Scotia has the “Sport and recreational expenses for children” which is also a $500 non-refundable credit if the organization is registered with the NS government. Saskatchewan has the Active Families Benefit which is a refundable credit for up to $150 (100% of the amount paid) for cultural, recreational, and sport activities.

Take a Certificate Tax Course. Now it’s time for you: consider earning a certificate in personal income tax preparation to save money on preparing your family’s returns professionally, or helping others from a home-based tax preparation business.  Your certified skills make you more employable, too, or will allow you to add this much needed skill to a financial services practice. Contact Knowledge Bureau to learn in the convenience of your home with online courses. And yes, the tuition qualifies for a non-refundable tax credit.

The net result of your “Back to School” Financial Planning—you could end up in the black rather than the red after tax season 2014. . .and that’s “paying it forward” in a great way!

NEXT WEEK: Child Care and Medical Expenses, Public Transportation, and Refunds and Missed Claims

Evelyn Jacks is President of Knowledge Bureau and author of 50 books on tax and personal wealth management. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of this year’s three day think tank in Ojai, CA Nov 10-13 will be “Back to the Future – Collaborative Wealth Management.”  Follow Evelyn on Twitter at @EvelynJacks.

Ready, Richer, and Energized for Prosperity

Stephen Covey was right…it pays to sharpen the saw.[1]

Despite spotty weather, Canadians seemed to have had a wonderful summer, by all accounts. To our collective delight, we also found out that our family households are getting richer: our average household net worth rose 5.8% over a year ago, according to WealthScapes 2013, a study released by Environics Analytics on July 26. It’s the kind of statistic that makes the well-rested soul want to spring back into action!

Canadian’s average household net worth was $400,151 on December 31, 2012, made up primarily of real estate and liquid assets less debt. The study revealed that the economic recovery is well underway in Canada and that in fact, stock portfolios are increasing again; so is the value of real estate. According to the study, debt has only ticked up modestly in the meantime.

This certainly serves as a “heads up” for anyone in the tax and financial services industries. If you have not yet considered wealth management as a service in your business, you should. Real Wealth Management™ involves the full financial picture…tax efficient investment, retirement, business, succession and estate planning. Canadians are going to need more of it, as they become richer and as they pass along their wealth from one generation to the next.

Fall is a tremendous time to re-energize and get back to school. I love to learn at this time of the year and my focus is going to be on the tremendous opportunity that we have in bringing tax and financial advisors together to become masters at wealth management. Their clients will so appreciate it, going forward and our opportunity is significant: collectively, well-managed wealth will contribute to a high standard of living for our entire country.

It’s Your Money. Your Life. It takes as much time to think big as it does to think small. This fall, think big—strategize on the bright future that is before us and act on it. We have an opportunity to work collaboratively to build on our momentum. Education is the key.

Evelyn Jacks is President of Knowledge Bureau and author of 50 books on tax and personal wealth management. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of this year’s three day think tank in Ojai, CA Nov 10-13 will be “Back to the Future – Collaborative Wealth Management.”  Follow Evelyn on Twitter at @EvelynJacks.

[1] Covey, Stephen R. The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change. New York: Free Press, 2004.