How retirees can get the most from their tax returns

December 12, 2014

There are several tax credits that can help lighten the financial load of seniors. Do you know which deductions you can claim as a retiree to get the most from your tax returns?

How retirees can get the most from their tax returns

Even if you don't earn a salary as a retiree, you can’t escape tax time. But for retirees, a tax return doesn’t necessarily have to be a dirge. You can lighten the load with a few tax credits intended just for your age group. If you’re not sure how to proceed, here are a few pointers.

Federal credits to claim

Here are some of the credits you can claim on a tax return for retirees, although eligibility differs from one person to another, depending on income:

  • You may qualify for the Age Amount, a non-refundable credit, if you are 65 or older at the end of the tax year and your net income doesn’t exceed the threshold. This threshold may change from year to year, so be sure to check the Canada Revenue Agency (CRA) website.
  • The pension income amount is for taxpayers 65 and older and who receive income from a private or public pension plan.
  • Pension income splitting is an excellent option to take advantage of on your tax return for retirees. You can transfer up to 50 per cent of your retirement income to your spouse. However, to take advantage of this benefit, you must be 65 or older. Pension income splitting can help you reduce the total tax you and your spouse have to pay when one of you receives a smaller pension than the other.

Other credits that could help you save

  • Medical expenses—the list of eligible expenses is long so visit the CRA website to learn more and remember to keep all your receipts.
  • GST/HST credit—low-income families are eligible
  • The disability tax credit
  • The caregiver amount
  • The public transit amount
  • Pension sharing—pension received from the Canada Pension Plan can be split between spouses to save on income tax. This is applicable throughout Canada, except in Quebec, where pension benefits are issued from the Régie des Rentes du Québec

You can claim additional credits on your provincial or territorial tax return for retirees. It's always a good idea to go over your tax return with a fine-tooth comb to ensure you receive all the credits to which you’re entitled. If you’re not up to the paperwork, a tax preparer or accountant can help.

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