Filing Tax Returns for Your Children, Good Reasons To Do It
If your kids are under 18 they might not make a lot of money or own a lot of assets, in fact you most likely should claim them as dependents. Mind you a number of bright kids have started million dollar websites, whether your child has done that or has a part-time paper route there are benefits to filing tax returns for them too, even if it’s not required.
If your son or daughter had a part-time job, summer job, income from baby-sitting etc. filing a tax return and reporting that earned income establishes room RRSP contributions, which they could then make the following year if they so choose. It’s also a good practice to educate your kids about taxes, about the importance of responsibly maintaining their finances, and getting them in the habit of filing on time and taking advantage of all available credits and other options to maximize their income and savings.
For teenagers there are refundable tax credits. A number of provinces offer these credits to low- and no-income individuals when there is no provincial tax to be reduced (sound like your kid?).
Once your son or daughter is older and in university (like Simon Fraser University where my son graduated from for example) they should always claim their eligible tuition, education and textbook amounts when filing their returns. Some people don’t realize that unused amounts are transferable to their spouse, parent or grandparent up to a maximum of $5,000 per person (Federal, not Provincial). Credits established that cannot be used or transferred in the current year can be carried forward and claimed by the student in a later year. Contact us today for more information or to file your taxes for 2013 with us. We will exceed your expectations.