It’s the new year, and that means tax season will soon be upon us. Are you ready? Got all your receipts? Ready to claim all of your deductions to get the biggest return? If you’re like the majority of Canadians, you’re shaking your head no, but that’s alright, there’s time. Before you go to file, make sure to know what new tax credits apply to you, and the ins and outs of claiming your freelance income.
Check For Tax Credit Updates
Before you file your taxes, you should make sure that you go over any changes that have been made over the past year, to make sure you aren’t missing out on any new deductions. Now, I don’t have any kids myself, but it seems like in Canada there are a ton of updates to tax credits that apply to parents. First, there’s the New Family Tax Cut, which provides a tax credit equal to the amount that would be realized if $50,000 of income was transferred from the higher earning parent to the lower earning parent. The max credit for this is capped at $2,000.
There have also been changes to the Children’s Fitness Tax Credit, where now you can claim up to $1,000 retroactively for 2014. So if you paid for an activity in 2014 that doesn’t take place until 2015, you can still claim it. Finally, the Universal Child Care Credit (although not part of your tax refund) has been beefed up too. For children under the age of six, the credit has been increased from $100/month to $160/month and for children over 6, the benefit is $60/month. You won’t see these savings right away, but you’ll get a lump sum in July 2015 for Jan to June’s benefits, and then monthly payments after that.
If you’re like me (that is, childless), you’re not entirely left out of these new tax changes. For first time charity donors, there’s the First-Time Donor Super Credit, which gives you extra credit for your donations. For search and rescue workers who put in over 200 hours or more of volunteer work, there’s also the Search and Rescue Credit, which can give you a tax savings of up to $450.
Now that you’re up to date on the updates to personal income tax, what about if you have side hustle income?
A Canadian’s Guide to Claiming Freelance Income
I just started claiming online income on my taxes last year, and it was more than a little bit intimidating. Fortunately I came across these amazing posts from Save.Spend.Splurge that walks you through the process here and here. I highly recommend following these guides, it demystifies the whole process.
What About US Freelancers?
I’m no expert in US income tax law, but I know a few freelancers who’ve filed their fair share of taxes in the US. In particular, Carrie from Careful Cents has put together a very cool tax checklist for entrepreneurs and freelancers located in the US.
Filing Taxes Yourself
I know a few people who think that filing taxes is just the most awful task on the face of the earth and not something they could possibly handle themselves, but for everyone else, I really, really advocate at least going through the process of filing your own taxes online with a program like H&R Block’s. Going through the steps yourself will help you really understand how you are taxed and where you could be minimizing your tax burden.
If you’re too afraid that you’ll make a mistake and end up getting dinged by the government, you can always hire a tax specialist like to finish up the process and check for any errors. In fact, I’ve got a special giveaway for people such as yourselves. H&R Block has generously donated a $100 gift card to one lucky winner, just follow the instructions below to enter.
This giveaway is now closed.