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April 21, 2021

Don't miss these frequently overlooked tax breaks

Worried about taxes? Then make sure you're making use of every deduction under the sun. And in the right order.

Does it make sense, for instance, to save up your eligible tax credits — like those for charitable donations — over several years and claim them all at once?

Unless they're not paying tax at all, the answer to that question is usually no, according to lawyer Adam Scherer, a partner at Soberman LLP in Toronto.

Waiting to claim them doesn't really help, no matter what your tax bracket is today or might be down the road, he tells Advisor, a how-to magazine for financial professionals. 

The way tax credits are designed, they're "basically equivalent to a deduction at the lowest rate of tax," Scherer says. "Whether someone's in the third bracket or the highest bracket, it really doesn't make a difference."  

Medical expense claims are the one exception to the rule, however, since you can choose any 12-month period to claim them as long as it ends in the taxation year (e.g., any expenses made between April 1, 2021 and March 30, 2021).

Alternatively, if someone incurs expenses worth $2,500 in December, but plans to have eye correction surgery the following April, it can make sense to save the December expenses and claim them the following year, he suggests.

You earned ‘em – be sure to use ‘em, warns Investors Group in a recent tax bulletin. Here’s the firm’s list of the most commonly missed tax credits

Did you know, for instance, that the costs of adopting a child are deductible? You can write off up to $10,909 and split it between parents if that makes sense. What about that transit pass as well?

Have you ever missed out on a deduction? Were you able to remedy the situation? 

By Gordon Powers, MSN Money

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo), canoe.ca, AOL.ca, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...