2016 Year End Tax Tips
The December 31st deadline is important for making charitable donations, incurring medical expenses, for contributing to spousal RRSPs (if you are close to retirement), contributing to RESPs, and for RRSP or RRIF withdrawals if you are in a low tax bracket.
Do you need money from your TFSA (tax free savings plan)? Take the money out before December 31 so you get that “room” back in January 2017.
If you turned 65 in 2016 and do not have a private pension plan, convert some of your RRSPs to RRIFs and withdraw $2,000 to take advantage of the pension income credit.
Also, December 31st 2016 is the final deadline for making any changes to your 2006 taxes. Why would you? Maybe you should have qualified for the Disability Tax Credit back then? Or maybe you incurred some capital losses that were not claimed? We need to get that adjusted now.
December 31st 2016 is also the deadline to claim the Manitoba Primary Caregiver Tax Credit for 2013 (we can only go back three years). Or if we need to adjust the Pension Income Splitting, we can only go back three years. And if you should have claimed the $700 property tax education credit on your income taxes, we can only go back to 2013.
Here are some other tax tips for 2016 from the entire Ste Anne Tax Service team:
Anni: New for 2016 is if you have sold your principal residence since January 1 2016, you need to disclose it on your tax return. Here’s what Canada Revenue Agency says: “Starting with the 2016 tax year, generally due by late April 2017, you will be required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax and benefit return when you sell your principal residence to claim the full principal residence exemption.” Bring us your lawyer documents that show the sale price and property description, and hope you remember when you purchased it. If you do not report it the penalties are severe: $100 per month until you file the election, so you must disclose!
Therese: Let us know if you have changed your mailing address and phone numbers (no longer have a land line?). And let us know if your banking has changed for direct deposit. And new for 2017 you can have pre-authorized debit for the amount you owe.
Anni: Another reason to consider RRSP contributions especially if you have children under 18: Your Canada Child Benefit is based on your family income which can be reduced by RRSP contributions, so tax savings can be increased substantially (especially if combined family net income is $45,000 to 65,000). Call or Email me for some “what if calculations” for your 2016 taxes before the RRSP deadline of March 1 2017 to see what your tax savings could be.
Ruth: Regarding medical travel expenses, keep your 2016 wall or pocket calendar or wherever you record all your doctor appointments. Use a medical log sheet to record the dates, doctor’s name, name of clinic or hospital, and number of km (must be more than 40km one way, and for a medical service you cannot get locally). If you need a log sheet, drop by the office or call or email us for a copy. If you didn’t keep track of all your medical appointments, you can contact Manitoba Health and get a printout for the year.
Therese: Regarding prescriptions, we recommend you go to your pharmacy in January and ask for a detailed list for the entire 2016 calendar year for each family member. Easier than keeping all those little receipts!
Cheryl: Remember all medical expenses: premiums for health plans you pay yourself through work (keep your end of year paystub or get a letter), or pension, or directly; dental; chiropractor; eye exams and glasses; travel health insurance; portion of rent if you are in senior assisted living or supportive housing; laser eye surgery; and any expenses that you pay out of pocket that is not covered by a health plan (excluding massage therapy).
Anni: New for 2016 is the “Teacher and Early Childhood Educator School Supply Tax Credit”; teachers and day care professionals: bring us your receipts for supplies if you were not reimbursed.
Darlene: The Manitoba Senior’s School Tax Rebate no longer has an application and deadline, it will be included on your income taxes. The maximum is still $470, but now it will be reduced once your family income exceeds $40,000. So bring your property tax bill to identify the Education portion.
In 2016 all families with children under 18 will have the Universal Child Care Benefit ($60 or $160 per child) to claim as income for just the first six months; since July you have been receiving the combined Canada Child Benefit and it is non-taxable.
To make it easier for you, we can access your file at CRA (with your written authorization); so if you are missing any Tax Slips (T4, CPP, OAS, EI, T4A, UCCB, etc), we may be able to retrieve them so you don’t have to go hunting or making phone calls.
We expect CRA on-line filing to start February 13 2017. We normally have access to tax slips for CPP and OAS already on that date, so if that that is all you need, we can file your taxes starting mid-February! You don’t have to wait for them to arrive in the mail!
If you haven’t gone south yet and need Snowbird Mail Service, give us a call and arrange pick up of your mail while you are gone.
And remember Service Canada comes to Ste Anne (beside the Co-op) the third Thursday of every month, including December 15. A representative is there to answer any questions you have about CPP and OAS and you can get on-line access too.
Merry Christmas, Joyeux Noel, Frohe Weihnachten, Glaedelig Jul
Ste Anne Tax Service team (Anni, Ruth, Cheryl, Darlene, Erik & Therese)
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact her at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or Info@SteAnneTaxService.ca.