Tax tips to lower the cost of education
(NC)—Valuable tax preparation resources are available to communities across Ontario prepared by the Certified General Accountants of Ontario www.cga-ontario.org.
Here is a snapshot of tips pertaining to offset education costs now and in the future:
• There is a non-refundable federal “textbook tax credit” of 15 per cent of $65, or $10, to cover each month the student is eligible to receive the full-time education tax credit and 15 per cent of $20, or $3, for each month they are eligible for a part-time education tax credit.
• Parents who spend at least 12 hours per month studying in an educational program lasting at least three consecutive weeks at a secondary school, college, university or other designated educational institution, are eligible to claim expenses incurred for child care expenses while they or their spouse/common-law partner attend certain schools.
• Scholarship, fellowship or bursary income with respect to post-secondary education or occupational training is fully exempt from taxation, provided it applies to enrolment in a program that entitles the student to claim the education credit. (They must be eligible to claim that education credit during the current, preceding or following taxation year.) This exemption also covers elementary and secondary school education, such as in a private school setting. Scholarship, fellowship or bursary income that doesn't meet this requirement is subject to a $500 tax-exempt ceiling.
• For every dollar a parent, grandparent or other person contributes toward the RESP of a child up to 18, the federal government will contribute at least an additional 20 cents, up to an annual limit of $500 for a $2,500 contribution through the Canada education-savings grant (CESG). Special rules apply to contributions made on behalf of 16 and 17 year-olds.
• Families with net family income of up to $42,707 in 2012 are entitled to a higher annual CESG grant of 40 cents for every dollar on their first $500 of RESP contributions. Families with net family income between $42,707 and $85,414 are eligible for a higher grant of 30 cents per dollar each year on their first $500 of contributions.
• RESPs allow adults to grow their education savings tax free too. You can name yourself or another adult as the sole beneficiary of an RESP, as there are no age limits for RESPs established for only one individual.
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