The tax man, a student’s best friend

Don't snooze your dollars away // MRehan via Compfight
Don't snooze your dollars away // MRehan via Compfight

Post-secondary is expensive. Unless your family has salted away some serious cash, you’re going to have to hustle your buns to earn enough money to pay for classes or take out some student loans. The loans route is usually pretty nasty—the average student debt in Alberta is more than $25 000, which often takes more than a decade to pay off.

A recent BMO survey says that Alberta students spend an average of $1236 on back-to-school expenses, the highest in the country. And tuition costs creep ever higher each year, throwing a little bit more on students’ backs with each passing semester.

Recognizing the financial stress that comes with higher learning, the Canada Revenue Agency throws students a few bones. Learners qualify for a slew of tax benefits. Benefits—aka deductions or credits—mean the government will tax less of your income, meaning you’ll have more skrillah in your pocket after you file your taxes.
So even if you’re barely scraping by during school with a part-time job, take some small comfort knowing the government will help you out a little with these student tax breaks. Just remember to keep all of those receipts.

Education amount and tuition paid
These are big ones. You can claim your tuition paid on your taxes. This benefit is calculated by multiplying your tuition by the lowest tax rate, which is 15 percent. So if you paid $5000 in tuition, you get a $750 benefit.
The education amount is a separate credit to cover all those messy, non-tuition costs (like living) that come with higher education. Full-time students can claim $400 for each month they’re enrolled in a recognized post-secondary institution. It’s $120 monthly for part-time students. This really adds up if you’re in a four-year program. A big bonus is that you can carry forward any unused bits of this benefit. You can even transfer these credits to a parent, grandparent or spouse. This is handy if you’d like to thank mom or dad for any support they may have given you on your way to that degree.

Textbooks are damn pricey. The Canadian Federation of Students reports that the costs of textbooks has increased 812 percent in the last three decades, adjusted for inflation. Students are paying up to $1000 a semester for books—mandatory, expensive books that come out with new editions almost every year, making it harder to buy used.

Students can claim $65 a month if they’re full-time and $20 a month if they’re part time. It doesn’t cover the cost, but every little bit helps.

Interest on student loans
Let’s say you have the Alberta average of around $25 000 in student loans and you take 10 years to pay it off. The interest on that money is going to cost $7500 to $12 000, depending on what kind of repayment interest rate you choose. Put another way: if you’re repaying $300 a month on your student loan, a third of that is going to be interest.

Ouch. But thankfully Canada’s kindly tax people will give you a bit of a break on government-recognized student loans issued through the Canada Student Loans Act or Canada Student Financial Assistance Act. Just keep in mind that there is no tax break for interest paid on a student line of credit.

Paying to keep a car on the road while you’re a student is madness. Why not hop on the bus? The U of A, MacEwan and NAIT all hook up their students with the U-Pass, a deeply discounted transit ticket. And you can claim the cost of the U-Pass on your taxes.

Ditto if you’re going to a school that doesn’t offer the universal transit voucher. But you’ve got to remember to keep all your receipts for each month you buy a bus pass.

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