By Troy Peart The Afro News Vancouver
For most college or university students, financial planning amounts to how to save money on mandatory text books or which watering hole has the best drink specials but students often have unique opportunities that are not available to most other individuals.
One of the most overlooked opportunities available to students are moving expenses. If a student is moving away from home for full time studies and the distance is more than 40 kilometres from their current residence, a student may be able to deduct moving expenses from their income. Eligible expenses include such items as: traveling costs (including meals, lodging and vehicle expenses), storage and transportation costs for household effects, up to 15 days of meals or temporary accommodation and even most costs associated with buying or selling one’s residence. Similarly, moving expenses can often be deducted when one moves home (or somewhere else) in between school terms.
Another commonly available financial planning opportunity for students is tax credits for tuition, education and textbooks. These tax credits are non-refundable which basically means that one has have taxes payable in order to benefit from these credits. If one does not have enough taxes payable to take full advantage of the available tax credits, they can either carry them forward to a future year or transfer up to $5,000 to a spouse or parent. The tax credits for tuition are based on the actual amount of money paid for post secondary tuition fees while the tax credits available for education and textbooks are a fixed amount.
One of the most favourable planning opportunities for students is if they are fortunate enough to receive scholarships, bursaries or fellowships. Beginning in 2006, all of these types of income are fully tax exempt if the post secondary education program attended makes them eligible for the education tax credit mentioned above. Post secondary institutions and companies often have several scholarships and bursaries that are not awarded every year due to a lack of suitable applicants, so I would strongly recommend that all students spend some time applying for as many as possible.
Financial planning is often overlooked by students but effectively utilizing financial planning strategies can ensure that students are not only able to complete their studies but also start off their professional lives in a more favourable financial position. Professional advice should be utilized to ensure that one maximizes their opportunities while avoiding potential pitfalls. I have personally come across far too many instances where students could have been in a much better financial situation if their actions were different.
Troy Peart BBA, CFP, CFA can be emailed at email@example.com. Your questions comments or suggestions for future articles are encouraged. www.theafronews.ca