More Money Podcast - Special Episode - Facebook Live Q&A with Lisa Gittens from H&R Block

Episode Date: April 7, 2017

A special bonus podcast episode for you! I recently did a Facebook Live session with Lisa Gittens, senior tax expert from H&R Block, and I got a ton of requests to make the audio into a podcast episode. So here it is! Lisa answered tax questions live for 30 minutes, and we got some great questions too. Enjoy! Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and you are listening to a bonus episode. Bonus! I got a lot of requests after I did a special Facebook Live with Lisa Giddens, a senior tax expert from H&R Block, who I also did a podcast episode with. But I did a Facebook Live with her, and I got a lot of requests from people who watched it to turn it into a podcast episode. So maybe they don't have time to watch the Q&A, the Ask Me Anything session we did, but they would like to listen to it maybe on the road or on the subway or something like that. So I'm like, all right, fine. I'll do a special bonus episode with the Facebook Live audio that we did because we got a lot of cool questions live from people that joined us for the Facebook Live audio that we did because, you know, we got a lot of cool questions live

from people that joined us for the Facebook Live. And, you know, some of these questions that they had, they may be questions that you have. And so Lisa shares all the answers for all those questions in this bonus episode. So enjoy. And another bonus, of course, is if you haven't started your taxes and you need a little help along the way, you want to get yourself organized, make sure to download my free tax preparation checklist. I've gotten some awesome feedback from it from people that are like, oh my god, thank you so much that you created this because I really didn't know what to do, where to go to, you know, get a list of things that I need for tax time. So make sure to go to jessicamorehouse.com slash tax prep checklist, and you will download a free copy and get started. Now let's get to that Facebook Live audio. Hello, and welcome to a very special Facebook Live. I am Jessica Morehouse, personal finance expert, blogger, and podcast host of the Mo Money Podcast.

And with me, I have a very special guest, Lisa Gittins from H&R Block. She is a senior tax expert, and she is here with me to answer all of your tax questions live. Thank you so much for joining me, Lisa. Thank you very much for having me. I'm very excited to talk about taxes with you, and I know you're excited to talk taxes with me too. I am.

It's going to be a good day. It's going to be a good day. It's going to be a good day. So we are taking questions live. So if you have a question, please let us know. Send them to us on my Facebook page. I think you just comment on the stream and we will get to it. But in the meantime, we got a lot of emails from people who had questions that they wanted to make sure that we didn't miss them so we're going to start with some of those questions and then we'll just see where it takes us um so the first question we got was i can't decide whether to do my taxes in store or online what would you say are the benefits of one over the other and i think this is a

question a lot of people are like how should i I do my taxes? What is the best way? That is correct. The benefit of this is at least you're on the right stage of you want to do your taxes. Yes. That's good. This is where I want it all started. Considering doing your taxes. Correct. Fabulous. Now that you are prepared to do your taxes, you're thinking, do I want to sit down with someone or do I want to do them online? If you've been preparing your taxes in the past and you're familiar with your situation, you have one employer, one T4, and you're confident about the tax credits that you want to claim, I would suggest you try the online. Because it's very straightforward. If you have your tax assessment from the previous year,

you're going to be able to go in on the online software and it will guide you through, do you have a T4? Enter your numbers here. And when you get that end result, if your situation is similar to what it was last year, you will be able to sit down and compare, okay, did I have all the line numbers entered? Am I confident with this refund? So that's something you can do if you have been filing your returns in the past. If you're a first-time filer or your

situation has changed from last year, this is where I recommend speaking to a professional who can look at how the changes are going to impact you and give you some information as to what the new credits are that you may be able to claim. So even sitting down and having that consultation in the office may prepare you then to go home and do it online. So it's a personal preference. Personal preference, absolutely. I've always kind of leaned towards doing it online. So it's a personal preference. Personal preference. Absolutely. I've always kind of leaned towards doing it online because I like the convenience of it. I like, and a lot of the programs out there allow you to do your taxes and you're like, you know what,

I'm going to get a snack and I'll come back to you. That is very good. Yes. Or save it, ask the question and come back to it. Exactly. Exactly. for sure. Okay, so let's move on to question number two from one of our askers. I'm filing for the first time on my own this year and I'm a student. Are certain things I should make sure to claim? I'm sure there's a lot of things they should know being a student and being a first-time filer. This is it. Now, if this is the first time that they've ever filed a tax return, they definitely want to sit down with a professional. First-time filers aren't always able to file directly with the NET file because there's no history with them, with Revenue Canada. So you want to go in and as a student specifically, you have your tuition that you're going to claim.

So you want to have your tuition receipt. If you worked part-time, you're going to have that T4 that you're going to claim. So you want to have your tuition receipt. If you worked part-time, you're going to have that T4 slip from your employer to claim. If you have been commuting back and forth to school using public transit, you want to claim your bus passes. And this is the last year that you can claim those bus passes. For student passes only? Last year, anyone claiming TTC passes. So if this is your first time as a student filing, claim those bus passes. Absolutely.

Because the credit isn't going to be available in future years for you. Absolutely. I know books is also a big one because those can be expensive. Now here's the change that's happening for 2016. So on your tuition receipt, if you were a full-time student, you get the months that you are full-time will be indicated on the slip. And there is a credit available that gives you funds for being in school full-time. And because you're in full-time, you get another credit for the textbook amount. You don't claim the actual cost of the textbooks,

but you say, I'm in school full-time for eight months, and there's a built-in credit that goes towards you buying the textbooks. This is the last year you're going to be able to claim that. In future years, you'll just claim the tuition fees. So this young lady stepping in, doing her taxes as a student for the first time in 2016, it's a great learning opportunity for her to get all of the credits available. Tuition fees, education amount, textbook amount, and claim her transit passes. Yeah, it's a good year to take advantage of all that.

Take advantage of all of the credits. Ooh, it looks like we have a question. Can I claim child care if a relative is looking after my child for cash? So if that relative is over 18 years and you are providing them a receipt for the services, yes, you can claim it. So you're going to claim the expense as a child care deduction, and your relative is going to claim the amount as income on their tax return. So probably if they're doing cash, I feel like they may not have some kind of receipt. So what's a good way to, I guess, kind of exchange money in that way? And this is the misconception that's out there, because if you're working for cash, there's exchange money in that way. And this is the misconception that's out there,

because if you're working for cash, there's a big misconception that you shouldn't report it on your income tax return. But if you're earning cash, it could be for babysitting, it could be for lawn cutting, it can be for hairdressing. It is always good to report your income on your tax return. In Ontario, for example, you can earn $11,000 before you have to pay any income tax. So you're paying that babysitter $3,000. They're earning the cash. They report it as income on their income tax return. There's a big benefit to them filing and reporting income, but they wouldn't have to pay tax on that unless it's over $11,000. Now, keep in mind that if this is something that you're wanting to be doing on a regular basis, then that babysitter may want to look at filing as a self-employed person and having Canada Pension and EI premiums deducted. But cash, definitely report it, give her the receipt,

claim the deduction on your tax return, and have your babysitter report it as income. Okay, perfect, perfect, perfect. Let's see what other questions we have. So we have another one that we got in advance, and it is, I'm a server and haven't been the best at recording my tips. What should I fill out for this section? Okay. So your tips are reported on line one or four of your T1 general. If you're filling it out by paper, you'll see that line. If you're filling it out online, as you're walking through the T4 section, you're going to see the different

line entries using the online software. So this is employment income that is not reported on a T4 slip. And you want to report your tips, the full gross amount of the tips that you've earned in the year. A lot of people, again, you're getting the tips cash, so you're shying away from it. I'd like to give an actual example where I had a client who came in, worked at three different jobs in 2016, all as a server. And she hadn't been keeping track of the tips. But we did an estimate, and basically I asked her, were the tips equal to your pay or more than your pay? And we figured out they were about equal to her pay every week. Her pay was about $3,000.

We claimed $5,000 in tips, looking at every week earnings. When she filed with her tips, her refund was actually higher than when she filed using her employment income alone. So going back to the specific question, you're going to report the T4 income on line 101, the TIP income on line 104. And if you haven't been keeping track of your TIPs, you know whether the amount you earned was equal to the pay you earned for that week, greater than or less than.

And you definitely want to be reporting an amount. Absolutely. Looks like we've got some more questions live. One person asked, if I miss out on RESP contributions, can I do a lump sum contribution? Okay. So RESP contributions, which is the Registered Education Savings Plan, those contributions are up to a maximum of $2,500 per year for your child. There is no deduction for those contributions on your income tax return. What happens there is any amount that you contribute, the government will match for your child's college fund in future years. With a registered retirement savings plan,

it's based on the deduction room, based on the income you earned in the previous year. So we're talking two different things there. And for the RESP, there isn't a catch-up room. It's what you can contribute a maximum of $2,500 in that year that the government will match. And no repercussions on your income tax. Okay. Perfect, perfect. I have another live question. What do I need to give my tax preparer in terms of info? I think this is a very popular question. People are like, what do I

give my tax professional? I have no idea where to start. So what are some key things that people need to bring to their tax professional? Very, very terrific question. Thank you for asking. So I'm an individual filing my tax return. The first thing you want to walk in with is proof of your identity. So visa photo ID that shows your current name and your address. The second thing you want to have is your T4 slips. So if you were working from your employer, if you have one or multiple T4s, you want to provide those T4s. The T4s are going to verify the address and on the T4 is your social insurance number and that identification, SIN number, income. Those are the three things that go into any basic

return. Now we look at things, the next step we're going to look at is your marital status. So let us know if you're married, let us know if you have any dependent children. And with those children, typically we need to know their names and their birthdates. Now we're looking at receipts. So as our previous question was talking about RRSPs, did you contribute to your RRSP? We're going to need to see the official income tax receipt for that. We also need to see official receipts for charitable donations. We need to see official receipts for things like medical expenses. If you are a renter or you own your own home and you've been paying property tax in Ontario, we need to see the rent receipt or the property tax statement for those credits.

Childcare expenses. We'll need to see a receipt either from the babysitter or from the daycare, from the camp, the sports camp, if you have receipts for your child attending sports camps. If your child has been doing tutoring. All of these things require an official income tax receipt to claim the credit. And again, this is the last year for bus passes, so I'm going to say you're going to bring in those TTC monthly passes. And the one thing that I found out when I was doing my taxes this year,

because I take the TTC and I always had the monthly pass, was for this past January, January 2016, there wasn't a date on it. I think they were switching things over, and I didn't keep my receipt. I just had my bus passes or my transit passes. And apparently I couldn't claim January because it didn't actually have the date on it, and I didn't have my receipt. Okay, that's an unusual situation. It was a total unusual thing, but just in case anyone is from Toronto and deals with that, I feel your pain. In the office, what we've experienced is the monthly pass on the

back of it, which we don't always look at, it says this is your official income tax receipt and it requires you to sign the pass on the back of it. Absolutely. Very important. So in the office, that's all we require. You bring in your monthly pass with your signature on the back. Keep in mind that if you are married or you are the one buying the passes for your dependent child, that those credits for the passes can be transferred. That's good. And I'm stressing this because this is the last year you can do it. Exactly. So take advantage.

Take advantage of it while it's still here. It's on the table. Let's see. I have another question. So someone is asking, where in my previous notice of assessments can I confirm if my accountant did claim the foreign withholding dividend tax credit for U.S. equities I own? That is a mouthful. Okay.

So on the notice of assessment, there are several sections. One that talks about total income, net income, taxable income, and then the very fourth section is the credits that you've claimed. And so on that assessment, it looks just like is the credits that you've claimed. And so on that assessment, it looks just like the tax return that has been prepared. Line by line, it will give you a line number and a description. So she wants to look in about the fourth section of her assessment to see that. Good to know. Good to know. Also, someone is asking, can I claim for sports activities? So I guess there's probably some specific things you can claim when it comes to sports. So you cannot claim your fitness membership or your sports activities for yourself.

The fitness credit that's on the table right now is available for your dependent children who are 18 or under. And that credit was previously $1,000 per child. For 2016, you claim the expenses up to $500 for each child. So golf classes, hockey, soccer, any of those. Is that also like equipment for the sports too? So what happens is when you pay the fee for the classes, typically if there's any equipment or anything included, it's included in the receipt. For this year, if the receipt is $1,000, the credit that you're going to be able to claim is only $500. It's set

at that maximum per child. Okay. I have a question for any last minute tax tips. How can we get organized in time? So I know we've got about a month before the deadline and I think lots of people are feeling the crunch time. What can they do to get themselves sorted out? Pull out that shoebox. Oh my gosh, my husband just did it. It's a disaster. Pull out the shoebox, put everything in the shoebox. Specifically now, it's pretty straightforward if you're working for an employer. You get the T4 in the mail, and that's the first trigger that, hey, it's tax time. Now you have your T4.

But again, I want to stress, medical expenses, you have those receipts. If your medical expense only consists of prescriptions, you can go to the pharmacy and they'll give you a statement that shows what you've paid for the year. Oh, that's nice. A lot of seniors don't think of doing that. No, I thought you were trying to see individual receipts. If you're going consistently to the same pharmacy, go in and ask them for a statement, and they will print it out for you, and you can bring that in as your receipt. Okay, that's super handy. Okay, things like if you've bought glasses or had dental work, if you don't have the receipt, you can go back to your dentist and ask for that. So it's not a problem if you can't find it. Just go back and ask for it. Things like the charitable donations. Now,

I want to stress here with the charitable donations because this is another credit that's on the table for the last time in 2016. You maybe have been making donations to the Red Cross. You're paying that $100 every year faithfully to the Red Cross. You can save up those donation receipts for five years and claim them. Because you haven't claimed any donations, you or your spouse in the last five years, now you get the 15% credit plus you get a first-time super donors credit, which gives you an additional 20% on those charitable donations because you saved them up. And so this isn't going to be the case for 2017? It's not going to be for 2017 because that first-time super credit

is no longer available for 2017. So if you've been saving them up, 2016 is the year to take advantage of that credit while it's still on the table. Absolutely. Oh, geez. For those who, I'd just like to say this, for those who use H&R Block or still have questions, walk into any one of our offices. We have an envelope that we'll give you to put all of your items inside.

The back of the envelope tells you all of the receipts and all of the credits that you can claim and what documentation you need. Oh, that's helpful. There you go. There you go. Okay. The next question I have is I find a very common one that people get confused about. I got married this past year. Do my husband and I need to file together? Is there a reason we should file together? I feel like so many people are confused by this. Very common question, and I'm going to answer that in a very simple way. Every individual in Canada is responsible for filing their own tax return. Exactly. The most important thing to know, and I think a lot of people don't realize this. You are a resident in Canada. You are responsible for filing your own tax return.

The reason we ask couples, whether married or common law, to come in and file together, your income is reported individually. But based on your income, there are certain credits available to you that you can transfer from one spouse to the other. And those credits are based on the income you're reporting. So when you come in and sit down together, we get an accurate picture of the income. We can transfer the credits and you both walk out knowing exactly the tax refund or the balance owing to Revenue Canada. Perfect. Perfect, perfect. And for anyone watching, we are

going to be live for another 10 minutes, so if you have a tax question and you don't know whether I should ask it or not, this is the time to ask it. So ask away, but moving along, I have another question for you. I sold my house recently and I understand I have to report it. Does this mean I am going to have to pay tax on it? This is a very fantastic question, thank you for asking. So for the first time in 2016, if you owned your own home and this is the home that you live in with your family, it's your principal residence, if you sold it in 2016 you are required to report it on your income tax return. You are going to report

the year that you bought the home, the cost of the home, and the proceeds that you sold the home for in 2016. If it is your principal residence, reporting it allows you to qualify for the capital gains exemption. So by reporting it, you are not going to have to pay tax. Failing to report it means you could be subject to paying tax on 50% of the profit of the sale. That could be a big amount. That could be a hefty tax bill for not reporting one item. Yeah, okay. So if you sold it only in 2016 and it was your principal

residence, you're going to report the details on your tax return with no tax consequence. Okay, we have another question live. Would getting a new higher paying job a month before the new year affect the amount you owe in state taxes as a full-time employee as well as a part-time student i will be getting money back from the feds do i owe my state a large sum okay let's go let's go back a couple of questions there's a couple of questions in there so you have you got a higher paying job a month before the year ended yes so, so like in December. In December. So based on the earnings of that job, the employer would have been deducting tax. So there should be no significant increase in your tax bill as long as the employer has deducted the tax according to what they were paying you.

That's the first part. You shouldn't have any huge surprise in a tax bill. The second part is if you were a student in part of the year, you have tuition that you paid so you have credits that you can use to reduce the tax payable on that high income job. So overall with this situation you have tuition credits, you only worked for one month at the end of the year, I would say you are in a win-win situation. Perfect. All right, so we're nearing the end, but I've got a few more questions to take us there. Okay, I've been traveling outside of

Canada for the past year and have worked some odd jobs in different countries I visited but didn't work in Canada. How do I report my income on my Canadian tax return and I feel like that's common for lots of people who like finished university maybe teach English somewhere and they're confused about what they do with their taxes this is a very good question we talk about a global economy yeah so you are resident in Canada because you are resident in Canada you're going to file a Canadian tax return. With all of these other countries, you're going to report employment income on line 104 because it's not reported on a T4. All of these other countries will have different slips that they gave you or you may have

earned cash, so you keep track of that. In Canada, there are over a hundred countries that we have tax treaties with. So the key thing here that I would say to this individual is contact Revenue Canada. Find out if the specific country you worked in has a tax treaty. You're still going to report the income on your tax return. If there is an existing treaty, you're going to claim an exemption for that income. So you report it as total income, but it is not included in your taxable income. And if that country, we

do have a treaty and they deducted tax, the third thing for that individual is they would be entitled to a foreign tax credit. But they would definitely be advised to either speak to a professional or contact Revenue Canada directly. Absolutely. Absolutely. Oh, and we've got to thank you for your question about the higher paying job. You're welcome. You are welcome. Okay, I want to ask a fun question because we have five minutes to go,

and we definitely need to talk about this one. I work as an escort or prostitute or drug dealer, one of those types of jobs. How should I file my taxes? You file your income tax and report your cash income on line 104. Here's what you don't know. You have income. So for yourself, you're considered a self-employed individual. You have income. You're also going to have expenses that you've earned

to generate that income. And by filing your tax return every year, if you continue to be in this profession when you retire, you're now able to contribute to your Canada pension plan, to your unemployment insurance, and be able to retire at 65 with a government pension. So file your income tax. You don't have to file your taxes. You'll file your income taxes. And that individual, by filing, is also entitled to receive other benefits, like their GST credits.

All right. So I have one kind of, it's not a specific question, but it's, you know, what crazy things have you heard that people blow their tax returns on? Have you, like, when people kind of may come into you and chat about like, oh, I can't wait to get my tax refund. This is what I, you know, hope to do with it. What are some of the things that people tell you? I think one of the most common things is we hear that they're going to use their tax return for their vacation. One of the craziest things I have was a specific client who was coming in to do her

taxes because she had veterinary bills for her cat. This was a cat that she was quite positive her accountant had been claiming as a dependent, wanted to claim the medical expenses, but she's doing her taxes at that specific time because she has a vet bill that she needs to pay. And she was very serious and very concerned. That's about the most crazy one. That's pretty crazy. That's pretty crazy. Well, we're going to wrap up here, but the good news is I will also be soon recording a podcast episode with Lisa. So if we haven't gotten your question, if you want to email me your question or leave it, again, in the comments, we will try our best to acknowledge it and answer it in our podcast episode.

But a big thank you for everyone who has joined us and asked questions live. Really appreciate it. We hope that you've learned a little bit more about taxes and feel a little less stressed and okay about it. Promise taxes aren't scary. They can actually be fun. Knowledge is power.

That is exactly it. And would you have any suggestions for, you know, if people want to learn a little bit more, educate themselves a bit more, where on the internet should they go? I definitely suggest the CRA's website. I suggest that as well. There is a lot of information out there. There really is. But a lot of it is mixed and muddled.

And so if you have a specific question, my recommendation is go straight to the Canada Revenue website or pick up the phone and call them. Canada Revenue is excellent with communicating with the taxpayers. It's not scary and you don't have to give them all of your personal information. You can ask them a direct question. Failing that, walk into any one of H&R Block's offices across the country and ask a question. We are here to help you. Absolutely. Great. Well, thank you so much, Lisa, for joining me and thank you for watching. And until next live stream, have a fabulous Wednesday. Well, I hope you enjoyed that bonus episode, the audio from my Facebook Live with Lisa Ginnis, Senior Tax Expert at H&R

Block. And I hope you got a lot out of it. Maybe you had some questions that were answered. You feel a little more prepared this tax season. You feel excited to maybe tackle your taxes. What a concept. I also want to remind you in case you haven't started your taxes yet, which is fine. That's okay. You're definitely not alone. If you want a little help along the way, make sure to download my free tax preparation checklist. It's a checklist that has a list of all the documents that you need to get ready for your taxes. So if you just need some guidance, you don't know what kind of, you know, what's a T4? Do I need a T4? You know, what kind of receipts do I need to save? What kind of documents do I need to bring to my tax

preparer? Or if I'm going to do it online, what do I need right in front of me so I can plug all that data in? Download my free tax preparation checklist. Just go to jessicamorales.com slash tax prep checklist and boom, you'll download it. Easy peasy lemon squeezy. So make sure to once again, go to jessicamorris.com slash tax prep checklist and you will be on your way to getting your taxes filed. All right, have a good rest of your day. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.