Evelyn Jacks: 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.