The Federal Budget was released on March 21 and the Province of Manitoba will release its budget in April, so I’ll hold my comments about those two for my May article.
And they don’t affect the current 2012 Personal Income Taxes that everyone has just recently filed, or is in the middle of getting ready to file. Remember that if you owe, you have to file by April 30 2013. Even if you cannot pay it, get it filed so you avoid expensive penalties. The interest is “only” 5%, so even if you owe money to The Government, the interest rate isn’t too bad.
If you are expecting a refund, you can wait up to three years to file, but not many people do. I am expecting a refund this year (I overpaid my quarterly installment payments) so I might wait a while; they will pay me 3% interest on the amount they owe me and I can’t get that at the bank!
Remember, those of us that are self employed have until June 15 to file our taxes without penalty. But if you owe, the interest does start ticking on May 1!
Most personal tax returns are fairly straight forward, but there are a couple of items that I sometimes ask for and I should explain why.
Your pay stubs contain some interesting information. First of all you should always compare your last pay stub of the year to the T4 you receive. Mistakes can happen and may not be detected. Have a look and see what you paid for. I will ask for premiums paid for a health and dental plan (not often shown in box 85 of a T4 – Employment Income). If you see on your paystub an amount for “total benefits” you need to find out from your employer, HR or payroll department what is included in that total.
From a tax point of view, I’m looking for mostly the medical expenses: health premiums and dental premiums. These can be claimed as a medical expense credit. Remember that your total medical expenses need to exceed 3% of your net income before you can make a claim. And those of you who no longer have employment income and have no taxes payable, it won’t help you as they are considered a “non-refundable tax credit”. It will help reduce your taxes payable, but if it’s already at zero, it won’t help you.
If you are working and have low income (but more than $3,268), claiming medical expenses may also help you get the refundable medical expense supplement.
Also look to see if you are paying for short and/or long term disability benefits. If you are, I recommend you keep your last pay stub of each year that shows the total year to date.
Keep these forever. Create a folder or envelope and label it “disability premiums”
If you are ever on disability income, you can deduct any premiums you paid into that plan. This is not a well known tax deduction, but as soon as I see someone receiving taxable disability income, I ask them to find out how much they paid into the plan. Most employers have this information, but not all. Best to keep this information all the time: keep your year-end pay-stub.
I had one client a few years ago that fortunately had kept all her pay stub since she started working more than 25 years earlier. We managed to get a sizeable refund for her by deducting the disability premiums she had paid all those years.
Also look for box 40 on your T4 from your employer. If it’s extremely large, make sure you understand what it is. I had a new client last year that was in that position and upon asking about it, we determined the employer’s accountant had made a mistake (it was a taxable benefit based on vehicle use); it could have cost the employee thousands in taxes payable if we had not inquired about it.
Property taxes don’t have much to do with income taxes, but sometimes they do.
Some of my clients live on property that has more than one home so neither home owner receives the $700 Manitoba Education Tax Credit. We claim it on their income tax return.
If you move to a new property, you may not get the $700 education credit (the municipality doesn’t know if you are living there as your personal home or if you plan to rent it out). You may need to apply for it through your municipality (check with them early summer).
If you were renting part of the year and owned a home part of the year, we may need to get part of the education credit through your income taxes.
There are a few people that can get more than the $700 education credit depending on how much their property taxes (school taxes) are and if they have fairly low income. This can only be determined at the time your taxes are calculated (my first clue is if you are paying only $250 for your property taxes – that’s the minimum everyone must pay).
Farmland School Tax Rebate
Finally there is one more item I’ve started looking for recently. It has nothing to do with income taxes, but not everyone is aware of it.
If you live on rural property, check your property tax bill. Do you see the term “farmland” in the assessment part? If so, you are eligible for the Farmland School Tax Rebate. I only learned about this less than two years ago accidently from a client who asked to have photocopies made of her previous three years of property tax bills and receipts.
I then checked my own property taxes (we live on some rural land) and saw the “farmland” assessment. Unfortunately, the Government of Manitoba only allows you to go back three years. You can get the applications on the Province of Manitoba website, or give me a call, or drop in to see me.
I am disappointed that the municipality did not advise everyone of this tax rebate. Most people unaware of it (like me) were thinking it only qualifies if you actually “farm” (which we do not). You qualify whether you farm or not.
Like most items tax related: you don’t know what you don’t know.
Another month of taxes and then I can relax a bit. I’ve seen hundreds of you already, and I expect to see many more of you during the month of April, leading up to the April 30 deadline. And the self employed before June 15.
Anni Markmann is a Tax Professional and owner of Ste Anne Tax Service. She lives, works, and volunteers in our community. Contact her at 204-422-6631, firstname.lastname@example.org or 36 Dawson Road in Ste Anne.