Cash Crunch? Dig for those Deductions and Credits

Sheila's daughter is a full-time student and her son-in-law works part-time so he can care for their little girl.  Sheila opened an RESP when her grand daughter was born and is delighted to see that the Canada Education Savings Grant is contributing 40% on the first $500 of RESP contributions that she makes each year!  Not only that, the $500 Canada Learning Bond was deposited to the RESP during the first year and there has been an additional $100 each year since!

Tax preparation is all about asking the right questions so you client doesn't miss any credits or deductions. CRA just released a new Tax Tips page called Top things families should know about taxes that you can use to open the discussion with your client. Topics include RRSPs, child care expenses, child benefit amounts, the Working Income Tax Benefit (WITB), the Children's fitness amount and many more.

What's more, the page links to helpful calculators, allowing taxpayers to estimate some benefits. These calculators are available for Child benefit amounts, the WITB and the GST/HST credit.

This page is not only for tax preparers ñ financial planners will find it useful as well. For example, consider new RESP applications as illustrated in the example above. Since 2005, the income-tested Canada Learning Bond and additional CESG has been available.  Depending upon the income level of the parents of the beneficiaries, various CESG rates and enhancements apply. In order to qualify for the Canada Learning Bond the parents have to receive the National Child Benefit Supplement. Use the Canada Child Tax Benefit calculator to show your clients whether or not they should expect an extra $500 in their RESP account! Clients opening RESPs for grandchildren should take note of this if their children are students or just getting established in the workforce, as it is the parents' income that is tested.

ADDITIONAL EDUCATIONAL RESOURCES: January Line by Line Tax Update Journal,

Essential Tax Facts: 2011 Edition