TAX CREDIT 101 FOR COUPLES

As I mentioned last week, there are several tax credits that can be split between spouses and some that can be transferred from parent to child / dependents and grandparents. Here are some of the most common tax credits that we need to look at during our tax planning:

• DONATIONS can be transferred between spouses.  Donations should be combined or allocated to maximize impact between spouses.  Donations are one of the most powerful Tax Credits.  In Alberta, we save 50% in tax on every dollar donated over $200.
• MEDICAL EXPENSES are not worth a lot of tax savings unless they are put through a Private Health Service Plan (PHSP).  However, if you have a lot of medical expenses, or low taxable income, you can still use medical expenses to save tax.  Medical expenses can be transferred between spouses and should be combined or allocated to maximize impact between spouses. 
•  TUTION, EDUCATION & TEXTBOOK AMOUNTS can be transferred between spouses and can be transferred to parents or grandparents. The maximum amount for this tax credit is $5,000 per person.
• PERSONAL EXEMPTIONS (BASIC PERSONAL AMOUNTS) can also be transferred between spouses.  Whatever portion is not used by one spouse, can be used by the other spouse.
• Other tax credits that can be split include Disability amounts, Age/Pension amounts, Transit amounts and Fitness amounts.

Have any questions on tax credits? Send me an email today! My email is info@kustomdesign.ca.