I recently tested how GenuTax Standard 2013 handles sharing the claim for a student’s university education expenses between the student and a parent. Next, I decided to do similar testing for a student and a parent using StudioTax to see how it handles a T2202A transfer between a student and a parent.
Will StudioTax 2013 Tell You How Much to Transfer from a Student to a Parent?
If a student has tax owing, then the student must use their Education Amount to reduce their payable taxes to 0. The student can only transfer any amount available above what they need to cancel out their own taxes.
GenuTax Standard 2013 will calculate how much the student has available to transfer or carry forward. But does StudioTax 2013?
I set up three tests for a student and parent. In each test, the student worked and received a T4 but the student’s employer had not withheld any tax, CPP, or EI so the student might owe some money to the CRA depending on the total income the student earned.
- Test 1: the student earned $8 000
- Test 2: the student earned $15 000
- Test 3: the student earned $25 000
Test 3 is intended to reflect a lucky student with a great co-op job placement.
StudioTax did calculate how much of the student’s Education amount could be transferred, but it didn’t make it easy to see.
To find the amount that could be transferred at the Federal tax level, in the Forms box on the left side of the screen, under the heading Federal forms, click on the link to Schedule 11.
- Line 20 on Schedule 11 is the total unused Education amount at the Federal Tax level;
- Line 23 is the maximum amount which can be transferred at the Federal Tax level; and
- Line 25 is the amount that will be carried forward at the Federal Tax level.
To find the amount that could be transferred at the Provincial tax level, in the Forms box on the left side of the screen, under the heading of Provincial forms, click on the link to Schedule 11.
- Line 6 is the total available tuition and education amount at the Provincial Tax level;
- Line 19 is the maximum amount which can be transferred at the Provincial Tax level.
- Line 21 is the amount that will be carried forward at the Provincial Tax level.
For my Tests, the program reported that the student could choose to transfer:
- 1 5000 federally. (I tried to input the full 7320 federally but it properly limited me to the CRA-allowed maximum of $5000 federally.) 6620 Provincially (again, it would not let me type in 7720 which is above the maximum permitted.)
- 2 2155 federally. 1194 provincially.
- 3 0 federally. 0 provincially.
These are the same results I received when doing the same tests using GenuTax Standard 2013, which is reassuring.
So StudioTax 2013 does tell you exactly how much you can transfer from a student to a parent, grandparent, or spouse’s or common-law partner’s parent or grandparent. It is not particularly easy to find the information, though. GenuTax Standard makes it a bit more obvious.
NOTE: A student does NOT have to transfer any of the Education Amount if they do not want to.
CAUTION: StudioTax Does Not Tell You This About Transferring Education Amounts
Neither StudioTax nor GenuTax warns you that if a student carries forward the Education Amount to a future tax year, that carried forward amount can be claimed ONLY by the student in future years. It can no longer be transferred to anyone else.
This information is clearly stated in the CRA tax guide but is not stated anywhere that I saw in these online programs.
Will StudioTax Tell Me How Much to Transfer from my Student’s T2202A to Me?
Unfortunately, no.
If you are the parent and you do not owe a large amount on your taxes, it is possible you do not need your child to transfer all of the allowable Education amount to you. You may be able to reduce your taxes payable to 0 by only transferring part of the amount. The unused amount can then be carried forward by the student to reduce the taxes the student will pay in future years.
StudioTax does not, however, “iterate” between the parent’s and the student’s returns to calculate this number.
How Can I Decide How Much of the Education Amount to Transfer to the Parent and How Much to Carry Forward for the Student’s Future Tax Returns?
I could not find any easy way to make this decision. It looks like you have to run test cases. (You also have to run test cases using GenuTax Standard 2013.)
It is much easier to run the test cases in StudioTax, however, than in GenuTax.
The following information assumes you only want to reduce the parent’s payable tax to zero. If you are trying to optimize the tax refund, you can follow the same general steps.
Complete the student’s tax return first, but do NOT send it in yet.
That will tell you the maximum amount that can be transferred federally and provincially from the student to the parent.
To test different transfer amounts, in StudioTax, you just
- Click on the Dependants button in the top navigation bar.
- Type the values for the Federal and Provincial transfer amount that you are testing in the respective boxes.
- Click OK.
- Check the Balance owing in the Summary box on the left side of the main StudioTax screen.
- Repeat with a new set of values for the Federal and Provincial transfer amount.
This requires that you
Run a first case for the parent assuming a transfer of 0 for both the federal and provincial Tuition transfer fields.
If the parent owes no taxes, don’t transfer anything to the parent. Report 0 for the transfers on the Student’s Schedule 11’s (and the paper T2202A), and submit both tax returns when you are sure they are correct.
If the parent does owe taxes, enter the maximum possible for the Federal and Provincial transfer.
If the parent still owes taxes, update the Student’s tax file (both Schedule 11’s (and the paper T2202A)) to show that all of the permitted Education amount is being transferred. Submit both tax returns when you are sure they are correct.
If the parent does not still owe taxes, you may want to check how little you need to transfer to ensure the Parent’s taxes are reduced only to zero.
Choose values for the Federal and Provincial transfer which are greater than 0 but less than the maximum permitted transfer. Keep checking the Balance owing in the Summary box until it gets to zero. Update both Schedule 11s (and the paper T2202A) for the Student’s tax return when you find the optimum amount to transfer. Carefully check both tax returns and submit them when they are correct.
Remember to File Your Actual Tax Returns!
Once you’ve finished optimizing the transfer, the tax returns must be filed. StudioTax does NOT file the tax returns automatically. You must follow the on screen instructions to NETFILE each of the 2 returns or print out a paper copy of each of the 2 returns and mail them in.
If you are NETFILEing or sending in a paper return, you do not have to include the Form T2202A with the amount being transferred. Keep it though for 7 years in case of an audit.
How Do I Use StudioTax to Input the Education Amount on a Student’s and a Parent’s Tax Return?
StudioTax does not provide much help for completing the tuition, education and book amounts for a student or the transfer amount for a parent. The process is pretty simple, though, if you understand that the Student fills out a federal Schedule 11 and a provincial Schedule 11 plus updates his or her paper T2202A form from the educational institution. The parent fills out some information on their dependant student which results in a line on their T1 Federal tax calculation and on their provincial or territorial tax calculation form.
Here are some details on what to enter on various screens when completing both the Student and the Parent’s tax return using StudioTax. NOTE: You must complete the Student’s tax return first so that you know the maximum education amount that can be transferred to the Parent’s tax return.
Completing the Student’s Income Tax File Using StudioTax 2013
Most of the return is completed like any other tax return. I will only describe here the parts specific to being a student and/or transferring or carrying forward the education amount.
Completing the Test Tax Return for the Student
After completing the name, address, marital status and SIN information screens,
the T Slips and RL Slips screen opens.
Click the select the box beside T4 and beside T2202A Tuition, Education, and Textbook Amounts Certificate.
Click Next.
On the next screen
Click to select the box beside
Tuition: Check if you are claiming tuition fees.
Click Next.
On the Tuition Information screen
Only students can claim tuition amounts. Amounts transferred from dependants are claimed as dependant. See line 324 in the CRA guide for more information.
Tuition and education amounts
Unused tuition and education amounts from your 2012 Notice of Assessment or Notice of Reassessment
Federal amount: __________
Provincial amount: __________
Use T2202(A) slip to enter the 2013 tuition and education amounts.
Use the Federal Schedule 11 to enter additional tuition and education amounts not declared using the T2202(A) slip.
Use RL-9 to enter the Quebec tuition amounts.
Click Next.
Our student is in first year so she does not have any unused amounts from her 2012 tax return. There is nothing that needs to be typed on this screen.
On the More Federal Tax information screen
Our student does not have any interest yet on any student loans so there is nothing that needs to be typed on this screen.
On the Provincial Credits screen.
Our student does not have any claim for Student residence costs, so nothing needs to be noted on the Provincial Credits screen.
Click Finish.
In the Forms box on the left side of the screen, scroll down then click on
T2202
to select and open it.
For the line
Eligible tuition fees part-time and full-time sessions
I typed 3600
Number of months for: Part-time, Box B:
I typed 0
Number of months for: Full-time, Box C:
I typed 8
No prompt is made suggesting transferring the Education amount, nor does it suggest visiting Schedule 11 even though the program has now used the information from the T2202 to start completing this Schedule.
From the Forms box on the left side of the screen, under the Federal Forms heading, click on:
Schedule 11
Inspect what the program has filled in:
- The eligible tuition fees paid for 2013, line 320, include the $3600 from the T2202(A).
- The number of full-time months, 8, has been completed for lines 6 and 7, leading to the calculation of the Education amount and the Textbook amount total on line 322 of $3720.
- The amount available to transfer or carry forward, $7320, is listed.
To make a transfer to your spouse or common-law partner, it is necessary to check the box beside Transfer to your spouse or common-law partner. (If you are creating linked returns that should lead to updating your partner’s tax file.)
If not, you must decide how much you want to transfer to a parent or grandparent or your spouse or common-law partner’s parent or grandparent and type it in yourself in Box 24. The program then will calculate any leftover amount and use it to report the Unused federal amount available to carry forward to a future year on line 25.
This is only for the Federal portion of your Education amount. You must also complete the same information for the Provincial portion of your Education amount.
In the Forms box on the left side of the screen, under the Provincial forms heading, click on the link to:
Schedule 11
Inspect what the program has filled in:
- The eligible tuition fees paid for 2013, line 5914, include the $3600 from the T2202(A).
- The number of full-time months, 8, has been completed for line 5918.
- The total available tuition and education amount, $7720, is reported on line 6.
If applicable, the amount of the Education amount claimed for 2013 is reported on line 13.
The amount available to transfer $1194, is listed on line 19, and the amount that will be carried forward is listed on line 21.
To make a transfer to your spouse or common-law partner, it is necessary to check the box beside Transfer to your spouse or common-law partner. (If you are creating linked returns that should lead to updating your partner’s tax file.)
If not, you must decide how much you want to transfer to a parent or grandparent or your spouse or common-law partner’s parent or grandparent and type it in yourself in Box 20. The program then will calculate any leftover amount and use it to report the Unused federal amount available to carry forward to a future year on line 21.
Completing the Parent’s Income Tax File Using StudioTax 2013
Here, I will only describe the parts specific to having a child transferring the education amount to the parent.
For the Parent’s Tax Return
On the T Slips and RL Slips screen
Do NOT click the box to select T2202. Only the student reports this form.
When you have selected the appropriate forms, click Next.
On the next screen
Click to select the box beside
Dependants: Check if you are claiming child care expenses and/or if you have dependants.
This is the box you select to get to receive the Education amount transferred from your child.
Click Next.
After you have input various screens of information, the
Child Care Expenses screen
will open.
Click on the Add button
The Dependant Name screen will open.
Type in the information for your Child in the appropriate fields.
- First Name:
- Last Name:
Click OK.
Now you can enter the information on the fields of
the Child Care Expenses screen
In the Date of Birth section, type in the Year: and select the correct Month: and Day: from the drop-down lists.
In the SIN section, type the student’s social insurance number.
From the drop-down list, select your Relationship with the student.
I selected Daughter.
In the Net Income field, type the student’s net income or click to select the box beside Income is Nil.
Click to select the appropriate choice of
- Healthy
- infirm
- Disabled
as defined by the CRA elsewhere.
If applicable, click to select the check box beside NOT living with the tax payer.
In the Tuition transfer section,
- In the Federal: box, type the amount to transfer Federally from your child student.
- In the Provincial box, type the amount to transfer provincially or territorially from your child student.
Ensure the check boxes are selected under the heading Claim: for both the Federal and the Provincial Tuition transfer.
If applicable, fill in any other fields not related to the Education amount.
Click OK.
StudioTax 2013 will now use the transferred Education amount to re-calculate the taxes owed. You can re-open this Dependant’s screen at any time by clicking on the Dependants button in the top navigation bar.
You can change the amount for the Federal and Provincial Education amount on the Dependants screen until StudioTax reports your Balance Owing as 0 or less in the Summary box at the left side of the screen.
That is the end of the sections of StudioTax relating to the Education amount. Do not forget to file the parent and child’s return after they have been updated and reviewed for accuracy!
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Have you used StudioTax to claim or transfer the Education amount for your own tax return? Please share your “learning” experiences with a comment.