Recently both the federal and the provincial governments announced their annual budgets. I will review some of the changes that may affect your personal income taxes in 2015 and 2016.
But first a few quick reminders: if you are self employed like me, you have until June 15 to file your 2014 taxes without penalty (interest did started accruing May 1: about $1 per $1,000 per week). I normally file mine on June 14 after I get everyone else’s done.
If you are not self employed and you missed the extended filing deadline of May 5, and you have an amount owing on your taxes, you now owe another 5% penalty (higher if this isn’t the first time you’ve been late) and 1% for each month you wait, PLUS the interest of 5% annual rate. So get your taxes done in May so you don’t face more penalties. Even if you cannot pay any or all of it, filing now will minimize the penalties.
If you are expecting a refund, you have lots of time (three years), but why wait to get your own money back! Remember to sign up for direct deposit as all cheques for tax refunds and GST credits will be phased out in 2016.
If you own foreign property that costs more than $100,000 you need to disclose that on your tax return. This can be shares in a US brokerage or a home or recreational property in the US or elsewhere.
Snowbirds: remember to complete Form 8840 IRS: Closer Connection Exception Statement for Aliens. If you travel the USA for 120 days or more each year, you may need to file this return with the IRS before June 15. The forms are on line, or call me or stop by if you need one and/or if you need help completing it.
Universal Child Care Benefit (UCCB) � it was announced in the fall that it will be for all children under age 18. And you do not need to apply if you are already receiving UCCB or Child Tax Benefit; it is effective January 1, and you will receive 6 months in July and then monthly after that. Remember it is taxable income (may want to increase tax withheld at work or other sources). Yes the one hand gives and the other one takes some back. An exception is single parents: one child can claim the income instead of the parent.
So let’s review the changes to your personal income taxes both federally and provincially after they announced their budgets in April. Provincial Budget: there are a few changes for personal income tax.
The Senior’s School Tax Rebate will increase to $470 and you must apply each year; if you received the $235 in 2014, you will get the application in the mail directly as a reminder; if you didn’t, make sure you do apply after you pay your property taxes as the deadline is the following March 31. As well, it will be expanded to include seniors who occupy their principal residence, even if they do not own the land, and pay school taxes (Paradise Village residents).
The Manitoba Primary Caregiver Tax Credit will increase from $1,275 per year to $1,400. If you are providing care to a loved one, a neighbour or a friend, you may qualify. Call me!
The Volunteer Firefighter and Search & Rescue $3,000 credits are now available for a provincial credit as well as the federal credit.
The Federal Budget had a few changes as well that may affect you.
Tax Free Savings Account – annual limit increased to $10,000 effective Jan 1 2015 – that means now! So now the cumulative maximum contribution available is now $41,000.
This is a great retirement savings plan for those with incomes under $45,000 (lowest federal tax bracket) and if you will likely remain in the same tax bracket for the future and into retirement. If you are in the lowest tax bracket and use RRSPs to save for the future, you may be taxed too heavily after age 65 and it may not make sense to use RRSPs to save for your retirement. Talk to me to find out what is right for you and your family.
The RRIF minimum withdrawal limits are reduced; doesn’t affect most of the clients I see (who withdraw more than the minimum), but does affect some higher income seniors who do not need the RRIF income; but it may become a tax issue when they pass away. If you have already withdrawn the previous annual minimum, you can re-contribute back until February 29 2016. Talk to me to see if it makes sense to do so.
A new Home Accessibility Tax Credit (HATC) can provide a non-refundable credit to seniors (65+) and disabled tax payers (eligible for the disability tax credit) to help pay for the cost of home renovations for safety and accessibility beginning January 1 2016; maximum credit is $10,000 per year. Eligible expenditures include ramps, walk-in tubs, wheel-in showers and grab bars. Remember this is a non-refundable credit: if you do not have income taxes payable it does not help you.
Employment Insurance (EI) compassionate care benefits coverage is increasing from 6 weeks to 6 months beginning January 1 2016.Those who have to take time away from work to care for a dying loved one will get more help from the federal government’s EI program. Remember you have to be paying into EI to be eligible (those of us who are self employed do not normally pay into EI, but you can with restrictions).
So those are some 2014 tax reminders and some new announcements for 2015 and 2016.
Thank you again for all your personal income tax business and for your referrals. The business grew again this year, and fortunately my returning and new employees were there to help out.
Heartfelt thanks to Ruth, Cheryl, Erik, Darlene, Gail and Angela for all the work they did in the past two months. They know I couldn’t have done it without them! We made a great team!
Anni Markmann is a tax professional working, living, and volunteering in our community. Contact Anni at 204-422-6631 or anni@steannetaxservice.ca or 36 Dawson Road in Ste Anne.