Personal Finance

Lower refund if earning over a certain amount (as a student?)

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  • Feb 27th, 2010 1:05 am
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[OP]
Member
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Dec 16, 2006
362 posts
8 upvotes

Lower refund if earning over a certain amount (as a student?)

I started to punch in my numbers through UFile yesterday, and my refund is half of what I expected it to be (I was forecasting based on last year's refund). The only difference between this year and last is that I earned less than $35k last year, but more than $35k this year. Is $35k some sort of threshold, or did I just miscalculate?

I am a full-time student, so I'm claiming my tuition. I don't know if I have any carryover from 2008 (Quicktax was down last night), but I'm not sure if that's going to make much of a difference.

I guess my main question is that even though I'm a full time student, does earning more than $35k put me into a higher tax bracket where I'd be getting less of a refund, or does it not matter if I'm a F/T student, and I just miscalculated and/or left out something?

Thanks in advance.
8 replies
Sr. Member
Oct 8, 2008
718 posts
68 upvotes
Nothing to do with being a student (unless you have less tutition credits available this year than last year, which is possible). Assuming your in Ontario, you go into a higher tax bracket at $36,848, and then again at $40,726.

Here are the tax brackets and rates: http://www.taxtips.ca/taxrates/on.htm

So yes I would say that some of your income is being taxed at a higher rate now. Technically, having a large refund can be a bad thing because it means that you gave the government an interest-free loan for the year, so a smaller refund is a sign that you held on to more of your own cash.+
[OP]
Member
User avatar
Dec 16, 2006
362 posts
8 upvotes
Awesome, thank you both for the tips--one thing I don't quite understand was that my refund for 2008 was roughly 10% of what I earned (under 35k), and I assumed that I was going to get the same this year, even though I'm above 40K, but I'm only calculating 5%. According to one of the links, I should be paying 10% more tax this year, but my refund is 50% less than last year's. Would the carry-over credits from tuition (if any) make a significant difference?

Thanks again!
Sr. Member
Oct 20, 2008
873 posts
1 upvote
GTA
yes

basically any reductions or credits to offset the net income would result in low tax payable, such as tuition fees, professional fees, public transit tickets etc - but generally more income you have, the more tax in dollars you pay

Also, depends how or if any tax at source was taken from your pay - if not enough tax was taken off, then your refund would be lower

The more you earn the higher the tax rate

Basic personal deductions is $10k a % of that applied as a tax credit

hope this helps
[OP]
Member
User avatar
Dec 16, 2006
362 posts
8 upvotes
Awesome, thanks for the help--once I get the numbers straightened out, I'll report back--it may be helpful for some other students working a ton of hours at their job.
Sr. Member
Jul 8, 2009
641 posts
182 upvotes
Toronto
What matters is your tax payable. Your refund is just an indication of how far off your paycheque deductions were.
Deal Addict
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Sep 18, 2003
1653 posts
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Winnipeg
I made a bit more than I did last year, and also have a bit smaller tax return, I ran it through Quicktax quickly to check and it gave me a similar number. I figured it was also the ratio of the basic tax credit to my income and the deductions would be smaller relatively...
But man, what are you doing as a full time student to earn that? Serving?
[OP]
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Dec 16, 2006
362 posts
8 upvotes
ragin_pyro wrote:
Feb 26th, 2010 10:17 pm
I made a bit more than I did last year, and also have a bit smaller tax return, I ran it through Quicktax quickly to check and it gave me a similar number. I figured it was also the ratio of the basic tax credit to my income and the deductions would be smaller relatively...
But man, what are you doing as a full time student to earn that? Serving?
Since I filed using Netfile in 2008, I can only access my notice of assessment online, but I forgot the password and I've been locked out of the 'reset' page for 24 hours because I couldn't get the answers to my password hint questions right...go me!

As for making that much, I was lucky enough to get a job at the library when early on in high school, and stuck with it through university. I call it the 'velvet handcuffs'--it pays ok to start, REALLY WELL after you've put in 7 or 8 years, but then you hit the ceiling pretty fast, unless you start moving to other positions in the organization--I'm currently at the highest grade for my position, but I could always move to another gig if it comes up and I'm qualified for it. I'm embarrassed to say that despite making that much, I still have bills pouring out of my ears, and I was hoping that a hefty refund would take care of the bulk of them. Guess I just have to keep clocking in those hours!

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