So many questions - AB resident

[MrSchwartz3]

I was matched to U Calgary for residency, and I have some questions re: finances

1. What are these tax credits people are talking about? I know that there are tuition tax credits and stuff like that, but I am unsure of how this carries into residency.

2. are call stipend fees taxed?

3. Can any Alberta residents weigh in on finances/what they manage to live off of in PGY-1?

[bloh]

1. They are the same tax credits. You get more during residency and you can start using them to reduce your income tax. You'll probably have enough to credits to pay $0 tax in PGY1

2. Yes, they're income

3. It shouldn't be much different than what you lived off as a medical student

[MrSchwartz3]

Thanks! 

I do not know which tax credits you're referring to, though. And do you have to pay taxes all year and then get a lump sum back from all the credits? I literally have no idea how any of this works.

[JohnGrisham]

5 hours ago, MrSchwartz3 said:

Thanks! 

I do not know which tax credits you're referring to, though. And do you have to pay taxes all year and then get a lump sum back from all the credits? I literally have no idea how any of this works.

Have you not done your taxes before? Nothing changes...you've assumedly filed taxes every year and have amassed tuition credits from being school forever, and they should be enough to cover your income taxes for R1 and maybe r2 depending.

If you have someone else prepare your taxes for you, I'd check in with them. If this is all new and you've never filed taxes its not too late and you can back file but just need to do a bit of paper work or e-file some old returns.

[bloh]

Yeah this stuff is fairly straightforward if you've been involved in filing your taxes. I'm guessing you haven't...:)

Better catch up!

[MrSchwartz3]

Didn’t need the criticisms guys. Thanks for your “help”. May wanna think about how you speak to people on the internet. 

[DermJuly2018PGY1]

1 hour ago, MrSchwartz3 said:

Didn’t need the criticisms guys. Thanks for your “help”. May wanna think about how you speak to people on the internet. 

Agreed. Thanks for your help, MrSchwartz. I had very much the same questions as you. Still many unanswered questions though

[JohnGrisham]

14 hours ago, MrSchwartz3 said:

Didn’t need the criticisms guys. Thanks for your “help”. May wanna think about how you speak to people on the internet. 

1. So you file income taxes every year. And every year, if you were in school, you would note down the total amount of tuition you paid. Then both the provincial and federal forms will calculate a tax credit amount based on how much tuition you paid. That credit, is exactly as it sounds: a credit to be applied to any outstanding income tax balance you would have to pay. Generally while you're in school, you're probably not working a significant amount that would mean you would have a tax bill. Since credits can only be applied to net positive amounts, you would simply carry those tax credits forward to the next year. Then the next year, you would do the same, and have a new set of credits...which would then add on to the prior years and keep going, until one day you finally have your first job in residency. 

2. Then in residency, you are being paid. So you will have to pay taxes on it. Typically with most jobs, they do a rough calculation and withhold the taxes from every pay cheque. So come tax season, you would report your income and such, and they would do a income tax calculation. Now remember, since you likely had  taxes withheld at your pay cheque,  this calculation is just to make sure the right amount in tax is calculated. 

Then, if it looks like you actually were withheld more than you truly owe, you would get a small return back. If you didn't withhold enough, you get a small bill. This is assuming tuition tax credits arent in the picture.

NOW, in most cases for those with tuition credits, the same math in point 2 is done: so lets say you had 10,000$(made up number) withheld in taxes over the course of the year on your paycheques. And lets say the math they do, for simplicity, shows that yes, indeed 10,000$ was about how much you owe in taxes. However, now, instead of having a small bill, or getting a small amount back: your tuition credits are APPLIED. So, if you've ammassed a large amount of credits, those credits will be applied and you will get the 10,000$ back as a return!  Then you're tuition credit balance(federal and provincial) will decrease, and you may* have some remaining. This will carry forward to the following year.  Then rinse repeat.

I hope this helps.  I would encourage you to read the CRA website and do some easy googling on your own to verify, and not rely on my words alone as I am simplifying some things, and may not be 100% accurate.

I think the reason why you may have gotten some criticism, is that this information and knowledge is very well laid out on the CRA's website and you didn't show that you did any preliminary research before posting.  

TLDR: You need to figure out if your parents have been filing your taxes for you or not firstly.  If you go onto the "CRA myaccount" (google it, top link), you can get access to your online tax account, where you can see if your tuition credits have been accumulating or not. I assume you have been providing whoever does your taxes all your forms and files...as i dont think your filers would have access to your school accounts etc. However, if this is ALL NEWS to you, and you have no idea what im talking about...you may not have been filing taxes and you have ALOT to catch up on. You will 100% want to address this ASAP before you begin residency, since its a fair amount of paper work and e-filing, nothing that cant be accomplished in a day or two if organized, but still something you want to do soon. Luckily, if you havent been working etc, you will likely be actually getting money back!  Unlikely that you have any penalties/fines to pay if no substantial income was unreported.