Summer has just passed, and the school year is almost upon us. This means that post-secondary school students and their families are looking at ways to help cut costs for further education. While there are certain costs like personal and living expenses that won’t be eligible for any tax breaks, certain tax deductions and credits are still available to students and their families. The most beneficial and substantial is the tuition or tax credit.
Tuition Tax Credit
Any student who spends more than $100 in tuition during 2021 is eligible for a non-refundable federal tax credit of 15 percent on these tuition costs.
Tuition costs will include fees for admission, exemptions, exams , the use of libraries and labs, and the membership and seminar fees related to a student’s program and administration. This also includes application fees, confirmation fees, charges for certificates, diplomas and degrees, academic fees, computer service fees when mandatory, and some ancillary fees (up to $250), like health care service fees and athletic fees.
If a student won’t have enough tax payable to use the entire credit, they are able to carry forward the amounts or transfer them to a spouse, parent or grandparent.
What Is The Loan Interest?
Any interest paid on federal and provincial student loans is eligible for a tax credit at filing season. This includes programs such as OSAP (Ontario Student Assistance Program). Other types of loans, such as student loans gotten from a bank, will not be eligible for the interest tax credit.
While student debt payment will not typically be required until a student graduates, this is important information for students looking for financial support for their education. You wouldn’t want to simply look at the tax rate, you will also need to consider the lost value of the tax credit if you pick your loan.
It’s also important to have an understanding of the consequences of consolidating your student loan with other types of debt, even at good rates.
Moving Expense Deduction
Most educational institutions are opening up their residences and might even have in-person learning this coming fall. This means that many students might be moving away from home. In circumstances where the move is at least 40 km closer to the post-secondary institute, the students might be eligible to claim moving expenses.
Child Care Expenses For Parents Returning To School
In general, childcare expenses need to be claimed by the parent with a lower income. However, if you are a parent returning to school, and your child is under 16 or has an impairment, the parent with the higher income can claim the expenses.
Contact Oasis LLP today for more help figuring out whether you will be eligible for these tax credits and deductions. We can help you curate a financial and tax plan that fits your life and your family as students return to school this fall.
