Personal Finance

Can I carry tuition tax credit without using it?

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  • Apr 22nd, 2009 12:23 pm
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Newbie
Mar 3, 2006
62 posts
Toronto / San Jose

Can I carry tuition tax credit without using it?

Say I have a personal income of 50k this year, and I have carry-over tuition credit of 30k from last year.

Can I not use the 30k to deduct tax and carry them over again and use them like 5 yrs later? The reason I am asking about this is that when personal income is higher, tuition credit can lower the income tax bracket better... :cheesygri
16 replies
Member
Nov 16, 2004
405 posts
2 upvotes
wouldn't you be better off to get your money back (tax refund) now
rather than later?
[OP]
Newbie
Mar 3, 2006
62 posts
Toronto / San Jose
bobbycat wrote:
Mar 24th, 2008 7:21 pm
wouldn't you be better off to get your money back (tax refund) now
rather than later?
This really depends on how much higher my income would be in future years :D

Regardless of whether I should use the credit now or not, do you know about the legality of carrying tuition credit over without using it?
Deal Addict
Jul 28, 2005
3237 posts
18 upvotes
y10k wrote:
Mar 24th, 2008 7:24 pm
Regardless of whether I should use the credit now or not, do you know about the legality of carrying tuition credit over without using it?
This question has been asked and answered many times. Just do a search on tuition credit.
Deal Addict
Jan 29, 2006
1563 posts
33 upvotes
ifyour referring to "unused education... amounts" i heard they expire after 5 years.
Member
Dec 14, 2007
278 posts
1 upvote
Toronto, Ontario
No, you can not choose to use part of the tuition. You have to reduce your tax to 0, anything left over can then be transferred or deferred. Sucks, eh?
Deal Addict
Dec 28, 2006
2372 posts
52 upvotes
Saskatoon
species5618w wrote:
Mar 24th, 2008 8:39 pm
No, you can not choose to use part of the tuition. You have to reduce your tax to 0, anything left over can then be transferred or deferred. Sucks, eh?
If you want to get really technical you don't HAVE to claim the credit BUT and it is a big BUT, the amount you are allowed to carry forward is the amount that you would have left over (if any) after reducing your tax payable to zero. So basically either you use the credit when you are supposed to or it is gone forever.

In reality, if you have T&E credits and you don't claim them when you are supposed to CRA is probably going to catch it and apply the credits whether you want them to or not.
Deal Addict
Sep 1, 2005
2469 posts
2 upvotes
ghostryder wrote:
Mar 24th, 2008 11:11 pm
If you want to get really technical you don't HAVE to claim the credit BUT and it is a big BUT, the amount you are allowed to carry forward is the amount that you would have left over (if any) after reducing your tax payable to zero. So basically either you use the credit when you are supposed to or it is gone forever.

In reality, if you have T&E credits and you don't claim them when you are supposed to CRA is probably going to catch it and apply the credits whether you want them to or not.
Nope the CRA runs rather simple checks based on the forms supplied by the schools, you need to claim them in the tax year occurred first. I made a mistake one year and thought I'd just put the credit on the next years taxes, I ended up having to file an adjustment to the prior year.

Tuition doesn't work the same way RRSP's do, with RRSP's you can carry them forward until you want to use them where tuition needs to be used in the tax year occured and any carried forward will be used the next year, if theres any carry over again, its used the next year, and so on until its all gone. My sugestion would be use your tuition credits and carry over your RRSPs
Deal Addict
Sep 2, 2004
1602 posts
41 upvotes
y10k wrote:
Mar 24th, 2008 7:24 pm
This really depends on how much higher my income would be in future years :D
Actually, it doesn't. We've gone over this many times in recent posts. Tuition credits are non-refundable tax credits. That means you get a certain percentage of taxes paid back. It has nothing to with taxable income, personal tax rates, etc. and does not vary from person to person.
Jr. Member
Oct 31, 2006
182 posts
1 upvote
Capt. wrote:
Mar 25th, 2008 1:22 am
Actually, it doesn't. We've gone over this many times in recent posts. Tuition credits are non-refundable tax credits. That means you get a certain percentage of taxes paid back. It has nothing to with taxable income, personal tax rates, etc. and does not vary from person to person.
+1.... look up the definitions of "tax credit" vs. "deduction"


Tax credits like the tuition tax credit don't reduce you're taxable income and therefore have no advantage if carried forward to a year with greater taxable income, they are basically = (tuition and educational credits)*(base tax rate)

It is to your advantage to take advantage of the credit ASAP since the only thing that could change the value of the credit is the base tax rate and only if the rate increases in the future.
Deal Addict
User avatar
May 24, 2006
1625 posts
93 upvotes
Trust me, CRA would NOT leave a hole this big in the tax system. :P

Most "tax saving" opportunity you can think of is covered off somewhere in the Act.
Member
Dec 14, 2007
278 posts
1 upvote
Toronto, Ontario
br0pbr0p wrote:
Mar 25th, 2008 1:37 am
Trust me, CRA would NOT leave a hole this big in the tax system. :P

Most "tax saving" opportunity you can think of is covered off somewhere in the Act.
Yes, the biggest one being the childcare amount. The politicians all make it sound like a huge tax relief for families. In reality, it can only be claimed by the lower income partner and it can not exceed 2/3 of his/her income. I know people who would separate with his/her spouse just so they can claim the amount. Ironic for a family orientated tax relief, eh?
Deal Addict
Dec 28, 2006
2372 posts
52 upvotes
Saskatoon
dark169 wrote:
Mar 24th, 2008 11:55 pm
Nope the CRA runs rather simple checks based on the forms supplied by the schools, you need to claim them in the tax year occurred first.
According to the Income Tax Act with respect to the T&E credits it says "you MAY claim" which means you don't have to.

But as I said, the amount you are allowed to carry forward (or transfer) is calculated by taking your T&E credits less the amount that would reduce your tax payable to zero. The left over amount is what you can carry forward.

There is nothing in the act that says you MUST claim T&E credits. If you choose not to and want to pay more tax than you have to that is your choice.
Deal Addict
Sep 2, 2004
1602 posts
41 upvotes
My understanding was you must use them until all taxes paid for the year have been recovered. I think this information was given to a family member from an accountant (CA) but can't be sure on that.
Deal Addict
Dec 28, 2006
2372 posts
52 upvotes
Saskatoon
Capt. wrote:
Mar 25th, 2008 2:52 pm
My understanding was you must use them until all taxes paid for the year have been recovered. I think this information was given to a family member from an accountant (CA) but can't be sure on that.
Let me put it this way. You have $10,000 in T&E credits. $7,000 of which would reduce your tax payable to zero. The ITA says "you may" claim this.

However, regardless of whether you claim it or not you can only carry forward (or transfer) $3000.

If you don't claim the $7,000 in credit then you just end up paying more taxes than you had to.
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