As the holidays are over and the reality of work and finances strikes, everybody is starting to gather their receipts and slips and prepare for filing the 2016 taxes.
We at Softron Tax are excited as ever too to help our clients save tax dollars. The government pushed an agenda to reduce taxes for the middle class. Today we discuss the changes below and you can decide whether the middle class is better off or not.
• Crediting the Teachers – School Supply Tax Credit
Starting 2016, qualified teachers which means teachers who have teacher’s certificate or early childhood educators can claim up to $1,000 for school supply expenses. So, make sure you bring all the receipts to your Softron tax expert when you file taxes this year.
• Canada Child Benefit
Although you have been receiving Canada Child Benefit since July 2016, you will be happy to know that all the payments are non-taxable. So, that will result in some tax savings as the only taxable benefits that you will need to report on your tax return will be Universal Child Care Benefit payments received from January 2016 to June 2016.
• Lower Middle Class Tax Bracket
The federal tax bracket for income between $45,282 to $90,563 has been reduced from 22% to 20.5%. This change also comes with a change in tax bracket for income more than $200,000 which has been increased from 29% to 33%. So, if an individual makes higher than $45,282 but less than $200,000, he will benefit from these changes
• Income Splitting
Families with children will no longer be allowed Income splitting on their tax returns. Earlier if one spouse was earing a higher tax bracket income than the other spouse, the couple could save up to $2,000 in taxes with income splitting.
• Children’s Art and Fitness Amounts
The children’s art and fitness amounts have been cut into half for the year 2016 and will be eliminated for the year 2017. The maximum amount that could be claimed for fitness is $500 and $250 for arts activities for the year 2016
So, families that were benefitting from income splitting may pay more in taxes this year and individuals who made less than $45,282 will not see any benefit of middle-class tax cuts.
On the hand, most families are enjoying higher Canada Child Benefit payments and the icing on the cake is that these payments are non-taxable as opposed to the old Universal Child Care Benefit payments.
So gear up and come to Softron Tax and we will find you the biggest tax refund this year too !!