Tuition Tax Credit is a great deduction to have when you are going to school. Many students are confused on how tuition works and why they receive too little in tax money or receive more than they expected. This article is an in depth look on what tuition tax credits are, how they work and how they can benefit all students whether they are a Canadian Citizen and or New to Canada. This article is longer than most as there are lots of information to help our students. Scroll down and see what titles apply to your query.
What are Tuition Tax Credits?
If you have taken courses in Canada at a Post Secondary Education Institution you could qualify for the tax credit. Most Universities and Colleges give out a form called a T2202A form. This form will show you the tuition amounts that are eligible for deduction as well as the months you have been in your program for that given year. The tuition tax credit is a good tax break that can be used against employment income. If you are 17 years and older, you will qualify for these tax credits to help you receive a bigger a refund. Tuition amounts must be over $100 in order to qualify.
When will I receive a T2202A form?
Your Post Secondary Education Institution such as a College or University will send you a T2202A form once the calendar year is done. If you have paid for tuition in 2020 for example, then they will issue the form to you in January of 2021. Note: that only when you pay for your education is when they issue the form to you, it is not when you enroll. This form can come in the mail, or you can download this form from Student Services on your University or College Website.
How do I apply the T2202A form on my tax return?
In order to receive your Tuition Tax Credit, you will need to add your T2202A form onto your tax return. The section on the tax return is called Schedule 11. Even if you have no income it is important to add your school form to your tax return as this can carry forward to future years when you do have income. For help on filing your tax return with your T2202A form, please contact us at Accufile as we can help you file with ease for a very low student rate.
Why did I not receive a big refund from my Tuition Tax Credit?
In order for your school tax credit to be applied this must go against employment income. For example, if you only have your Tuition T2202A form, then you will not receive any money back until you file your taxes with a T4 or some kind of employment. So in this case, you will file your T2202A form on your tax return. Then for next year when you do start to work, those education credits will carry forward and be used against that employment and help you get back the refund you deserve.
Tax Tip: Receiving a big refund from your Tuition Tax Credit
In order to receive that big refund, have your tuition credits carry forward until you begin working full time. When you work full time and you pay taxes for the year, the T2202A form will help you get back a lot of tax money. We have seen our clients receive as high as $10,000 per year when they filed. Just remember a good way to see what you can possibly get on your return, take a look at Box 22 on your T4. That number there is the max that you can get back as a tax refund. If your school credits exceed the amount and you have left over school credits, those credits will then carry forward to another year. Contact us for more details on how we can maximize your tax return.
How does my Tuition Carry Forward?
So when you file your return with your T2202A form, you will have two parts of tuition to carry forward. Federal and Provincial Tuition Tax Credit. If you have no employment income to go against these credits then your tuition will automatically carry forward. These can be seen on your notice of assessment after you file. You can find this written in the paragraph section of the assessment and will say unused tuition credits. If you have some employment income and there are still a remainder of tax credits left, they will carry forward to next year to be used again. Note: Tuition credits do not expire. So until you are able to apply your tuition tax credits, these will continue to carry forward each year until you are eligible to use them.
What if I am a International Student?
Yes if you have went to school in Canada and received a T2202A form, you as well can claim your Tuition Tax Credit. You will need to add this form to your tax return and this will apply to you as well. If you are leaving Canada, file the tax return anyway as the tuition tax credit will be forever on your file. In case you come back to Canada then you may be able to use them against future employment.
Does tuition from other countries apply to my Canadian Tax Return?
Yes if you are studying abroad for over 3 weeks you can also claim your tuition that was paid. Your Post Secondary Education Institution in that country would of course have to fill out the T2202A. They would also need to sign the form in order for this to qualify. When you file this form, the Canada Revenue agency will determine if this type of school qualifies for your Tuition Tax Credit.
What does a T2202A slip look like?
A T2202A slip looks like the following slip below:
As you can see the Institution name will be on the top left, your name and address just below as well. On the right side the program's eligible tuition credit amount, as well as the dates you attended the program. Part time and full time months are also added to the T2202A form.
How do I transfer my Tuition Tax Credits to someone else?
Yes this is very common where a student would transfer their credits to their parents or spouse in order for them to apply the credit. Everyone is allowed to transfer a maximum of $5000 Federal tuition credits and $5000 Provincial tuition credits. Many parents pay for their kids tuition and would like to receive the benefit for that payment. In order to file this transfer, the student would have to add the T2202A form onto their tax return, then elect to transfer the agreed amount. Remember $5000 is maximum for both. If there are any tuition credits left over, then that will stay with the student. Spouses can also collect the tuition transfer as well. Some students may not want to wait to apply their tuition to their future employment. In this case a student can transfer a maximum $5000 Federal tuition credits and $5000 Provincial tuition credits to their spouse. This is a common practice where the spouse can use that transfer against their employment. Remember only the current year of tuition are able to be transferred. You are not able to transfer past or carry forward amounts.
What if I forget to report my tuition in the past?
If you have forgotten to file your T2202A in the past, you can make an adjustment to a past return. Note: You must only apply tuition that is in a given year to the same year tax return. 2017 cannot be applied to a 2020 return. This must be adjusted in the past to the 2017 return. In order to make an adjustment, please fill out the T1 ADJ form and attach your tuition to this form. You may find this form in this link here. If you are looking for any help in filing a T2202A form and or needing help with your T1ADJ, contact us at Accufile and we can help you with anything you need.
What if my tuition was paid for by my Employer or Canadian Government?
If one of these apply to you, you will not be able to claim your Tuition Tax Credit from your T2202A form unless they have included it in your earnings. It is very important to make sure to not "double dip" when you are using any kind of credits. The Canada Revenue Agency are able to find if the tuition was paid by you or your employer or government. If you have any questions relating to this please contact us and we can help.
What are the benefits of having a T2202A form?
A T2202A form or Tuition Tax Credits are very beneficial to your return. These credits will help you receive a bigger refund if applied against income. In addition, the tuition credit can also carry forward if you are not able to use them. Always file your T2202A form on your tax return as the credits will help maximize your return.
Can I claim my textbooks and other fees?
The Canada Revenue only allows you claim your eligible tuition credits at this time. By filing the tuition tax credit, the tax return will automatically generate an extra credit to cover books. You will also notice that some of the University admin fees will not be on your form. Only eligible tuition is allowed to be deducted on a tax return. Student Interest can be deducted as well on your tax return. Only the interest portion that you pay in the year can be applied. You may find this section on the tax return on line 31900.
We are here to help!
Accufile is always here to help in filing your tuition tax credit. Filing a T2202A can be complicated at times especially when transferring tuition. See us on the home page as we can take care of your return for a rate of $25. Our Certified Accountants will make sure things are done right. Contact us today and see the extra refund you could be missing!