With tax season underway, there are some deductions and credits you might want to keep in mind as you file your return for 2022. Nicole Ewing, Director of Tax and Estate Planning, TD Wealth, joins Anthony Okolie with the details.
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With inflationary pressures and interest rates continuing to put a strain on Canadians' wallets, a hefty tax refund may provide a welcome financial boost. Nicole Ewing, director of tax and estate planning with TD Wealth, joins me now with tips to help bulk up your tax refund. Had the current economic environment changed anything when it comes to how people might approach tax filing this year?
Well, certainly it has changed the individuals experience of things. And so depending on your own circumstances and how the inflationary pressures may have impacted you and your earnings in 2022, you might want to think about how you are claiming your credits and deductions, whether you're using them for the 2022 taxation year or, perhaps, carrying them back to a previous year or forward, so maybe a little bit of math there.
We might also want to think about-- so the tax law selling was a huge thing in 2022, a lot of people trying to minimize the downside of the losses and realize and crystallize some of those losses. So you want to make sure that you're using those appropriately in this year's filing.
And then I'd say the biggest thing to be thinking about as well is to make sure that you're filing on time because the penalties or the interest that you would need to pay is now 8% on overdue taxes owing. That's up from 5%. That's a 60% jump. So pretty significant to be paying an 8% on any overdue taxes. So those are, sort of, top of mind for today.
And of course, 2022 was a tough one for a lot of Canadians when it comes to investments. What should people know if they experienced a capital loss in 2022?
So if you have a capital loss-- and, generally, that's because you would have triggered that loss, so hopefully you knew that was happening. And if you triggered that loss and you now have a capital loss, you can use that to offset any capital gains that you had. And that's going to reduce the overall tax payable.
Now if you had more losses than you had gains in this year, that's going to create a net capital loss that you can use. You can carry that back three years, perhaps, amend your returns or carry it forward indefinitely. So a very useful tool keeping in mind, though, that we can't do that within our non-registered account or in our registered accounts. Only our non-registered accounts are going to allow us to use the-- to offset our capital losses against capital gains.
OK, now let's talk about deductions for remote work from home. The home office expense is a deduction that used to be available for people working from home. What do people need to know when filing their taxes?
So this was the-- so we've always been able to-- certain employees have always been able to expense anything that they're spending in order to-- for the purpose of employment. What changed in 2020 was the method that one would use to claim this. And so the detailed method, that still applies to people who might have significant expenses.
But for those of us who are working from home due to COVID or have the opportunity or option to work from home due to COVID provided that you are working from home more than 50% of the time for at least four consecutive weeks, you will be able to use the temporary flat tax method where we can claim $2 a day up to a maximum of $500. So this was previously $400. It was increased to $500 last year, and it continues to be $500 this year.
Let's talk tax credits next, and there are some changes and some newer credits that might slip through the cracks, which may have an impact on certain people's situation. Firstly, there's a recent adjustment to the first time homebuyers credit. Now, if you bought a home last year-- and I know a lot of friends who have bought homes last year-- how might that benefit them?
Well, so you mentioned there's been a change, and that change has been an increase, which is great. So we've gone from $5,000 to $10,000 that you can claim on your return if you purchased a property in 2022 or if your spouse or common law partner did and you didn't and neither did they own a home in the year or the previous four years. So that's what's qualified as a first time home buyer is somebody who hasn't owned a property this year or previous four years. And if you purchased in the last year, then that will give you the opportunity to claim that $10,000 credit.
So we know about that one. There's new ones coming. But this is what we have for 2022. And for those who have the opportunity to claim, that's a nice $10,000 windfall.
OK, this is one I'm really interested in because if you're a news junkie like me, the digital news subscription tax credit is a pretty new credit to be aware of. Tell us about this one.
So this is a credit that if you subscribe to digital journalism and you have a subscription-- to the extent, it's a Canadian Journalism Organization. So we have to make sure that we're within the rules there-- you have the opportunity to claim up to $500 of the costs that you incurred to have that subscription. And you will receive up to a 15% return on that, so up to $75 back in your pocket.
So just making sure that you double check the rules. Make sure that the organizations that you subscribe to meet the requirements. But generally, certainly, the main ones that we think of would be qualifying for that. So it's a nice $75 return of that subscription expense.
Nicole, great information as always. Thanks for joining us.
Oh, my pleasure.
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With inflationary pressures and interest rates continuing to put a strain on Canadians' wallets, a hefty tax refund may provide a welcome financial boost. Nicole Ewing, director of tax and estate planning with TD Wealth, joins me now with tips to help bulk up your tax refund. Had the current economic environment changed anything when it comes to how people might approach tax filing this year?
Well, certainly it has changed the individuals experience of things. And so depending on your own circumstances and how the inflationary pressures may have impacted you and your earnings in 2022, you might want to think about how you are claiming your credits and deductions, whether you're using them for the 2022 taxation year or, perhaps, carrying them back to a previous year or forward, so maybe a little bit of math there.
We might also want to think about-- so the tax law selling was a huge thing in 2022, a lot of people trying to minimize the downside of the losses and realize and crystallize some of those losses. So you want to make sure that you're using those appropriately in this year's filing.
And then I'd say the biggest thing to be thinking about as well is to make sure that you're filing on time because the penalties or the interest that you would need to pay is now 8% on overdue taxes owing. That's up from 5%. That's a 60% jump. So pretty significant to be paying an 8% on any overdue taxes. So those are, sort of, top of mind for today.
And of course, 2022 was a tough one for a lot of Canadians when it comes to investments. What should people know if they experienced a capital loss in 2022?
So if you have a capital loss-- and, generally, that's because you would have triggered that loss, so hopefully you knew that was happening. And if you triggered that loss and you now have a capital loss, you can use that to offset any capital gains that you had. And that's going to reduce the overall tax payable.
Now if you had more losses than you had gains in this year, that's going to create a net capital loss that you can use. You can carry that back three years, perhaps, amend your returns or carry it forward indefinitely. So a very useful tool keeping in mind, though, that we can't do that within our non-registered account or in our registered accounts. Only our non-registered accounts are going to allow us to use the-- to offset our capital losses against capital gains.
OK, now let's talk about deductions for remote work from home. The home office expense is a deduction that used to be available for people working from home. What do people need to know when filing their taxes?
So this was the-- so we've always been able to-- certain employees have always been able to expense anything that they're spending in order to-- for the purpose of employment. What changed in 2020 was the method that one would use to claim this. And so the detailed method, that still applies to people who might have significant expenses.
But for those of us who are working from home due to COVID or have the opportunity or option to work from home due to COVID provided that you are working from home more than 50% of the time for at least four consecutive weeks, you will be able to use the temporary flat tax method where we can claim $2 a day up to a maximum of $500. So this was previously $400. It was increased to $500 last year, and it continues to be $500 this year.
Let's talk tax credits next, and there are some changes and some newer credits that might slip through the cracks, which may have an impact on certain people's situation. Firstly, there's a recent adjustment to the first time homebuyers credit. Now, if you bought a home last year-- and I know a lot of friends who have bought homes last year-- how might that benefit them?
Well, so you mentioned there's been a change, and that change has been an increase, which is great. So we've gone from $5,000 to $10,000 that you can claim on your return if you purchased a property in 2022 or if your spouse or common law partner did and you didn't and neither did they own a home in the year or the previous four years. So that's what's qualified as a first time home buyer is somebody who hasn't owned a property this year or previous four years. And if you purchased in the last year, then that will give you the opportunity to claim that $10,000 credit.
So we know about that one. There's new ones coming. But this is what we have for 2022. And for those who have the opportunity to claim, that's a nice $10,000 windfall.
OK, this is one I'm really interested in because if you're a news junkie like me, the digital news subscription tax credit is a pretty new credit to be aware of. Tell us about this one.
So this is a credit that if you subscribe to digital journalism and you have a subscription-- to the extent, it's a Canadian Journalism Organization. So we have to make sure that we're within the rules there-- you have the opportunity to claim up to $500 of the costs that you incurred to have that subscription. And you will receive up to a 15% return on that, so up to $75 back in your pocket.
So just making sure that you double check the rules. Make sure that the organizations that you subscribe to meet the requirements. But generally, certainly, the main ones that we think of would be qualifying for that. So it's a nice $75 return of that subscription expense.
Nicole, great information as always. Thanks for joining us.
Oh, my pleasure.
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