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Tax-Filing Tips: The case of the disappearing education credits
7/23/2018 9:50:16 AM
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By Knowledge Bureau  | Thursday, April 05, 2018


 

TAX PLANNING FROM THE KNOWLEDGE BUREAU



By Evelyn Jacks

If you are a post-secondary student, or spouse of one, or a supporting parent, and you are looking for the monthly education amount on the 2017 federal tax return, you may be a bit confused. It’s gone, but it’s not out completely.

Effective Jan. 1, 2017, only the tuition fee credit can be claimed on the federal tax return, and then only if the total eligible fees paid exceed $100 in the year. That happened in last year’s federal budget, when the finance department removed the monthly education amount of $400 for full-time students and $120 for part-time students, as well as the monthly textbook amount, which was $65 for full-time students and $20 for part-time students in prior years.

However, you will still see a reference to the tuition, education and textbook amounts on Schedule 11 of the federal tax return. That’s because students can continue to carry forward unused amounts of all three components of this credit from prior years.

Provincial changes

You may also recall seeing the tuition and education amounts on the calculation of provincial tax credits in previous years. No province ever had the textbook component. But now, some of the provinces have followed the federal system in eliminating the monthly education amount. Here’s how that looks for the 2017 tax filing year:

Education credits will continue for all of 2017 in the following provinces: B.C., Alberta, Manitoba, Nova Scotia, Newfoundland, Prince Edward Island, Northwest Territories and Nunavut.

The following provinces have made recent changes:

* Saskatchewan – eliminated Tuition and Education credits as of July 1, 2017
* Ontario – eliminated Tuition and Education credits as of September 5, 2017
* New Brunswick – eliminated Tuition and Education credits for all of 2017
* Yukon – eliminated Education and Textbook credits for all of 2017

Common definitions

In addition, you should be aware that the tax rules for claiming a “full-time student” and “part-time student” under the eliminated education amount will still be referred to when reporting the following provisions on the federal tax return:

* Scholarship exemptions
* Child care expense eligibility and claims for higher-income spouses
* Eligibility for the Working Income Tax Benefits
* Exemptions from TOSI (Tax on Split Income) rules for minors

Moving expenses

Students claiming moving expenses may be affected by the rules that exempt scholarship, bursary, and fellowship income after 2006, when students also qualified for the education amount. In prior years, moving expenses were deductible against such taxable income, but after 2006, some scholarships became non-taxable, which would mean that students could not claim moving expenses, unless there was taxable income at their place of study.

As these claims are often audited, it’s probably a good idea to review your history of claims for any post-secondary students in your family before completing the 2017 tax return.

© 2018 The Knowledge Bureau, Inc. All rights reserved. Reprinted with permission.

Evelyn Jacks is the founder and President of Knowledge Bureau, which brings continuing financial education in the multiple areas of specialization to advisors and their clients. She is the author of 52 books on tax and wealth planning. This article originally appeared in the Knowledge Bureau Report. Follow Evelyn Jacks on Twitter @EvelynJacks. Visit her blog at www.evelynjacks.com.

Evelyn Jacks’ latest book, NEW ESSENTIAL TAX FACTS: How to Make the Right Tax Moves and Be Audit-Proof, Too is available for pre-order now.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

 
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