Can Your Income Tax Refunds Pay Off Debt?

It is now that time of year again, the time to file for your income tax refunds. Income tax refunds for 2016 will be due on April 30, 2017. As a result of submitting the right information, your income tax refunds can earn you extra money. Therefore, before you file your taxes, there are a few things that you should know.

Income Tax Refunds

Your income tax refunds can potentially earn you extra cash. You should not consider this cash to be extra, it should be used to pay of debt.

Educators and Income Tax Refunds

Teachers or early childhood educators can now receive a tax credit up to $150.00 with their income tax refunds. A proposed school supply tax credit for 2016 has now been officially introduced. Eligible educators can claim a 15% refundable tax credit based on a supply purchase of up to $1,000.

Income Tax Refunds Up North

living in an area that is designated as a northern or intermediate zone allows you to be eligible for a tax deduction. Keep in mind that you lived in that location for at least 6 consecutive months in the past year.

In 2016, northern basic and residency deduction increased from $8.25 to $11 per day. As a result you can receive a tax deduction up to $22.00 for every day lived in a northern or intermediate zone. Your income tax refunds can potentially earn you a deduction of $3,916.00.

If you are receiving a form TD1 from an employer, you will most likely need to update this information. The proposed changes to the northern basic and residency deduction have been recently updated.

Income Tax Refunds Vs. RRSP

The first 2 months of the year is known as RRSP season. Canadians have till March 1st to contribute to their RRSP and have that contribution eligible for a tax deduction. This is a good move to maximize the amount received from your income tax refunds.

Your income tax refunds can be very useful towards paying off your debt. It is important that you provide the proper information in your income tax statement to maximize your return.

Your income tax refunds can be useful with paying off your debt, but, it will not get you out of debt. In a situation where you are overwhelmed with your finances, its best you seek a professional debt consultant.

We are Licensed Insolvency Trustees that have extensive experience in addressing financial issues and challenges such as those noted above as well as all the questions you may have, including managing credit.

Feel free to email us at, call us at 416 736 4357 (HELP), or fill out the contact form on this website, to book a free, no-obligation consultation with one of our debt solutions’ experts.

Make an appointment today, and we will provide some solutions specifically tailored to your situation. We look forward to assisting.