I'm here to make the case for doing your taxes, whatever you earn. Every year, many Canadians living on low incomes choose not to file, stating little return -- no pun intended -- on the effort. Are you one of them? You may not realize that whatever bracket you fall in, filing has benefits tailored specifically to your situation. Below, you will find three reasons why filing is essential for those with low incomes:
1. Special Tax Credits for Workers and Students
Deciphering and understanding available tax credits can seem like a dense and complicated undertaking. It doesn't need to be. Working with a professional or using tax software that guides you through specific questions will help, as will looking into credits that apply to you.
First, consider the working income tax benefit (WITB). Like the name implies, the WITB is a refundable tax credit that provides relief for eligible people with low-incomes that are currently in the workforce.
On the other hand, if you have yet to enter the workforce or you only have limited employment because you are enrolled as a post-secondary student, you also have access to tax credits.
The credits for tuition, education and textbook can help lessen the burden of expensive education for students attending qualifying college or university. The actual tax savings, however, will depend on your tax rate. If you don't have sufficient income to claim the full amounts, you can carry them forward to a future year or transfer it to your parent, grandparent or spouse.
These are just a couple of the 400 credits and deductions out there, many of which can provide significant assistance to low-income earners.
2. It's Fast, Easy, and Affordable
So, as you can see above, you could enjoy previously overlooked compensation. This goes even further when you consider the short amount of time, ease, and tiny cost that it entails.
If you have a low income, you likely don't have a complicated tax picture -- that's a good thing. It means the process should be simple. Of course, it has never been easier thanks to software like TurboTax, which is free for simple tax situations, students and people with household incomes under $20,000, and guides you step-by-step, ensuring accuracy and helping you get the best possible return. With all of that in mind, you can't afford not to file.
3. It's Good for Your Health
That's right. You're likely to get a refund when you file your taxes with a low income, which, in essence, adds to your overall income for the year. And that's important. It's been proven that there's a strong link between low income and poor health, such as the 2013 study by the Wellesley Institute. That extra money from your tax return will enable you to better address your health needs, which can be difficult to afford when you have a tight budget.
If you've been paying for medical expenses, you may be eligible to deduct them from your taxable income, provided they exceed three per cent of your net income. As you have to itemize your medical deductions, be sure to keep good records. Ask your pharmacy if they can give you a print out summary of your prescriptions during the year -- many are able to do so, thereby saving you time.
Additionally -- and perhaps more obviously -- stress can wreak havoc on your body, negatively impacting your blood pressure, heart, and myriad other parts. By getting taxes out of the way, saving more money through credits, and understanding your financial picture, you can reduce stress and feel better.
Filing taxes really can make a huge difference for those with little or no income. Have you done yours yet?
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