# postponing education tax credits?



## twowheeled (Jan 15, 2011)

2010 was the last year I attended post secondary, but my income was so low there is no reason to use my education tax credits. I know unused credits can be transferred to a spouse or parent, but do you have the option of not using any credit and saving it for next year? In which case, would I just not report the credit on my income tax filing?


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## peterk (May 16, 2010)

Nope. First thing I don't think you're allowed. Second it is only a tax _credit_ not a _deduction_. Therefore you are only getting the benefit of a 15% savings on the tuition you paid, and not a full deduction at your top tax bracket. It's in your best interest to claim the tuition credit this year.
Edit: same goes for the parental transfer. Even if your parents made a ton of money last year if you transfer your credits to them they will still only get the 15% benefit that you would.

IF you have contributed to your RRSP at all though last year you should postpone claiming it this year and wait for 2011 where you'll be using the top tax bracket against those contibutions.


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## Rico (Jan 27, 2011)

You must use any tuition/education credits to reduce your taxes owing to zero. Beyond that, you can carry the credits forward. If you get any benefit from claiming it with your spouse (as in your spouse has income and there are taxes to claim against) you might as well do it sooner than later. Assuming you're using tax software to prepare your return, the program should automatically calculate the credits needed and carry the rest forward. If you want to transfer the credits, you have to tell the program to do so (up to the maximum allowed).


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## stardancer (Apr 26, 2009)

Further to Rico, you must report the T2202A in the year you paid the tuition. Any credit that is not used is carried forward; CRA keeps track of this and will report it on your Notice of Assessment, and will change your return in the future to use it up.

The same goes for an RSP contribution. You must report it in the year you made the contribution, but on schedule 7, you can designate how much you want to use this year and carry forward the balance. A tax software program should also tell you if you are claiming too much.


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## warp (Sep 4, 2010)

Its simple...but the tax code makes it seem difficult.

Fill out your education amounts in the year you pay them/are entitled to them. you must fill out the fed and prov separately with your tax return.

You will use as much as need ed to get your tax payable, ( fed & prov), down to zero.

If there are any credits left over you can carry them forward to any future year when they can be used to lower your taxes payable. Of course the sooner you use them the better.

As a thought...you can transfer them to a spouse/parent, have thenuse the credit to lower their taxes, and have them just give you the tax savings they enjoy.

Because this is a CREDIT, the sooner you use them, through yourself or otherrs is best, since you will get your money sooner.
Why leave any money in the governements pocket?

good luck


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## ghostryder (Apr 5, 2009)

Rico said:


> You must use any tuition/education credits to reduce your taxes owing to zero. Beyond that, you can carry the credits forward.



Technically incorrect. 

The income tax act says you "may" claim the T&E credits. It does not say you "must".

That said, if you don't claim them, CRA will apply them automatically up to the point your tax payable is zero. You could then file an objection to challenge this assessment.


However, the amount you get to carry forward is the amount of credits you have less the amount you would need to reduce your tax payable to zero. Whether you claim the credits in the current year or not. 


If you actually chose to challenge your assessment as described above you would effectively be sacrificing those credits you could have used to reduce your tax payable.

But why would anyone want to do that? That's why CRA will apply your T&E credits up to the point your tax payable is zero.

But hey, if you want to voluntarily pay more tax than you have to, you could take it to tax court. Good luck.


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## Barwelle (Feb 23, 2011)

ghostryder said:


> However, the amount you get to carry forward is the amount of credits you have less the amount you would need to reduce your tax payable to zero. Whether you claim the credits in the current year or not.
> 
> 
> If you actually chose to challenge your assessment as described above you would effectively be sacrificing those credits you could have used to reduce your tax payable.
> ...


It's too bad you couldn't defer the usage of those credits. I'll be making more money 5 years from now than I did last year, so if I could have saved those credits for later, they would have saved me more money on my taxes, because my marginal tax rate would be higher than it is now.

Not that I'm complaining that I got a significant tax return this year, but I could have got a _more_ significant tax return later if the rules were just a little different!


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## Young&Ambitious (Aug 11, 2010)

Barewelle you're mixing up credits with deductions, common mistake. Tax credits are applied against taxes payable whereas tax deductions are the ones that reduce your net income. So you are good to go


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## CanadianCapitalist (Mar 31, 2009)

Here are the details, straight from the horse's mouth:

http://www.cra-arc.gc.ca/tx/ndvdls/...tng/ddctns/lns300-350/323/crry-frwrd-eng.html


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## Barwelle (Feb 23, 2011)

Young&Ambitious said:


> Barewelle you're mixing up credits with deductions, common mistake. Tax credits are applied against taxes payable whereas tax deductions are the ones that reduce your net income. So you are good to go


Ah... gotcha. You're right. I should have known that, I do my own taxes every year. I went back and checked out my taxes... it's all in the math.

Really, it's better to use them sooner than later! Because that money will be "worth" less in the future due to inflation!


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## Rico (Jan 27, 2011)

ghostryder said:


> Technically incorrect.
> 
> The income tax act says you "may" claim the T&E credits. It does not say you "must".
> 
> .


To clarify, I meant "when using tuition credits, you must reduce tax to zero" - as in you can't carry them forward until this is done. Of course, nobody has to claim their donations, tuition, medical expenses, transit passes, etc. if they don't want to.


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## cardhu (May 26, 2009)

> _To clarify, I meant "when using tuition credits, you must reduce tax to zero" - as in you can't carry them forward until this is done. Of course, nobody has to claim their donations, tuition, medical expenses, transit passes, etc. if they don't want to. _


True ... and for that matter, nobody is “required” to deduct their RRSP contributions ... they are perfectly entitled to pay tax twice if that is what they wish to do ... come to think of it, isn’t there a line on the paper tax forms where you can volunteer to pay “extra” tax, if you’re so inclined? 

I’ve never met anyone who was so inclined, although many people pay extra tax through non-optimal decision-making.


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