A few (obvious?) questions on taxes
I'm sorry if these questions seem stupid or obvious, it's my first time filling out forms, and I don't have the slightest idea of what I'm doing.
1) I recently got a part-time job, and I am filling out a tax credit form for the federal government and BC. I go to university full time, and my total income is less than my total claim amount. I get the feeling that if my income is lower than my total claim amount, I don't have to pay taxes? Is that correct?
Also, what exactly are tax credits? Are they just the amount that gets deducted from taxes?
If I don't have to pay taxes, where do my credits go?
2) I receive money from my parents overseas. They're Canadian citizens. Would this be considered a money gift or something else? Do I have to declare it somewhere and possibly pay taxes? What about my parents? They don't live in Canada anymore and they don't pay taxes.
3) I have some tax credit for a bus pass and and tax-deductible donations. Is it worth sending these in for tax credit if I don't have to pay taxes? Where do I send it?
Thanks in advance
Usually when your income is lower then the basic claim amount you will not pay any taxes. Most of the credits would then not be usuable to you since most tax credits are there to reduce the taxes for people that actually pay taxes.
When filling out that form, you need to remember that by checking off available tax credits you will indicate to your employer that less tax needs to be withheld.
The problem arises when the tax credits go away. For example the tuition credits etc. Your employer will still be reducing the witholding tax but when you go to file your tax return and do not have some of the tax credits, you will end up with a big tax payable. This becomes annoying.
My point is: It is not as important to inform your employer of all your available tax credits. As long as they are recorded on your tax return, you will receive the benefit. The only reason your employer is asking is to determine your witholding tax. Withholding tax is not the same as tax payable. The tax payable is the important number calculated on your tax return and is only reduced by the withholding tax not paid by the withholding tax. I hope that last part makes sense.