Tuition tax credits are non-refundable credits, meaning that they will work toward lowering the amount of taxes you owe but they will not be contributed to any refunds.
This means that they will help keep your owing taxes low but will not increase the amount you get back on your taxes.
Sometimes, however, it works out that the tuition you are claiming exceeds the amount you owe. So what happens to the rest of the tuition tax credit? Does it disappear into obscurity?
It doesn’t and the good news is that you can carry forward or transfer any unused credits!
Before we discuss how transferring and carrying forward works, let’s look at how you can go about claiming your tuition tax credits – and don’t forget to read to the end for some important considerations you should know about.
Claiming Tuition Tax Credits
Any student over the age of 16 who is enrolled in a post-secondary designated educational institution in Canada can claim tuition credits on their tax return. If you are studying abroad, you are eligible as long as you are studying full-time for at least three weeks.
However, if your employer pays or reimburses your tuition, you are not eligible to claim the tuition credit unless the tuition amount is included in your earnings. Or, if the employer pays tuition to your parent on your behalf.
In order to claim the tuition tax credit, you will need a T2202 (Tuition and Enrolment Certificate) issued by your school to certify that you qualify for the tax credit as well as provide you with the amount to claim on your taxes.
Unused Tuition Tax Credit Options
In order to find out how much you have in unused tuition, log in to your CRA My Account. From there, click “Go to Tax Returns” in the Tax Returns section.
Scroll down on that page and look for the “Carryover Amounts” section and click “View Carryover Amounts”.
Keep scrolling until you find the “Federal Tuition Amounts” and the “Provincial Tuition Amounts”. This is where you’ll see if you have any unused amounts in the first column for last year’s row.
If that row is blank, you don’t have any unused amounts that you can carry forward or transfer.
You can also find this information on your Notice of Assessment from last year or on your federal and provincial Schedule 11 from last year’s tax return.
Carrying Forward Tuition
If you have unused tuition tax credits for the current tax year (that you have not transferred), you can carry them forward to claim in future years – but you have to claim your carry forward in the first year that you pay income tax.
In order to calculate the amount you are carrying forward, you have to file a tax return and fill out federal Schedule 11.
As far as carrying forward your unused tuition tax credits, this is done automatically by the CRA. They will apply the available tuition amount to your taxes every year until it has been all used.
Another option you have for unused tuition tax credits is to transfer the amount to qualifying relatives such as parents, grandparents, spouses, and common-law partners.
In order to do so, you must designate the individual receiving the transfer, as well as the amount of the transfer, with form T2202 and Schedule 11.
It’s important to note that your parents or grandparents are not qualified recipients if your spouse or partner claims an amount for you on lines 30300 or 32600 on their tax return.
If you do choose a parent or grandparent to receive your unused tuition tax credits, they will claim the transfer amount on line 32400 of their tax return. Transfers to your spouse or partner can be claimed on line 36000 of Schedule 2.
When it comes to transferring your tuition tax credits, you can only transfer up to $5,000 of the current year’s tuition. You can only transfer your provincial tuition from this year – carry-forward amounts from a past year cannot be transferred.
Why Would I Transfer My Unused Tuition Tax Credits?
While you can certainly carry over your unused tax credits to benefit future tax returns, there are some benefits to transferring the amount to a spouse or family member:
- You get the money earlier.
- If there is a change in tax law, tuition tax rates will likely go down meaning that they will be worth less on your tax return.
- You have to use your tuition credits until you reduce your taxes to zero, regardless of any applicable tax credits (based on your income). For this reason, you would be simply wasting your tuition tax credits when other income-based benefits would reduce your amount owing anyway.
Important Considerations for Tuition Tax Credits
Before you carry forward or transfer your tuition tax credits, here are some important considerations to keep in mind:
- For 2018 and later years, there is no tuition transfer available in New Brunswick, Ontario, or Saskatchewan because these provinces no longer have the tuition-education tax credits.
- If you move to another province after carrying forward your tuition, you have to use the federal unused tuition amounts from your Notice of Assessment (or CRA account) when completing the provincial Schedule 11 for your new province of residence (unless you moved to Ontario, Québed or PEI).
- Students must have taxable income in order to claim tuition tax credits.
- There is a Federal tax credit as well as a Provincial tax credit for tuition, so to claim or transfer these amounts you have to complete both the Federal Schedule 11 and the Provincial Schedule 11.
Get the Most Out of Your Tuition Tax Credits
Instead of attempting to navigate through the process of transferring or carrying forward your unused tuition tax credits, why not let the professionals do the work for you?
Our professional team at Liu & Associates has years of experience providing expert personal accounting services to clients in Edmonton and Calgary.