A beginner’s guide on taxes for teenagers and young adults.

As a teenager or young adult, taxes may seem complicated and overwhelming. You may be wondering how taxes work in Canada, how income tax is calculated, or where to begin when filing your return.

But don’t worry, we’ll guide you through the process. Learn how to manage your finances and make sure you’re taking advantage of the different credits and benefits you could be eligible for.

Whether you earned money over the last year or not, filing your taxes could mean money back in your pocket. So, let’s discuss the need-to-knows about taxes in Canada.

How does the Canadian income tax system work?

Running a country costs money. Governments need this money to pay for things like healthcare, education, building roads, social services, and public safety. Where does this money come from? Mostly from taxes. 

This means that everyone in society puts their money together to pay for the things we all need or think are important. 

In Canada, there are different types of taxes, like taxes on profits from selling things, sales tax, and taxes that employers pay for their workers. But the biggest source of money for the federal government is income tax.

What’s income tax and how is it calculated?

Let’s start by defining income – this is the money that you earn from sources like a job, owning a business, or from investments. If you’re earning income, you must give a portion of that money to the government to pay for the essential services mentioned above. 

This is true even if you’re under the age of 18 or 19. You start paying taxes when you begin earning income, not at the age you become an adult in your province or territory. 

The amount of income tax you need to pay is calculated using a formula that considers where you live, how much income you earn, and your deductions, credits, and expenses. 

In Canada, we have a progressive tax system. This means the tax rate goes up as your income goes up. Both the federal government and each province or territory have their own tax rates and brackets. You can check out this blog How to identify your income tax bracket to see what tax rates apply to your province or territory. 

When should I start filing my taxes?

You can start filing your taxes as early as mid-February, and the deadline to file is April 30. When April 30 falls on a weekend or holiday, the CRA extends the tax deadline to the next business day.

Filing your taxes early will give you more time to organize your documents and get your refund as quickly as possible.

If I didn’t earn any income this year, do I still need to file a tax return?

Even if you didn’t earn any money from working, or made less than $15,705, filing is still necessary for you to gain access to credits and benefits. Things like the GST/HST credit and the Canada Carbon Rebate are both refundable tax credits that give you money back.

By the way, $15,705 isn’t a random number. That’s called the basic personal amount. It’s the amount of money where, if you earned that or less, the government would give you back the money you were taxed. 

In Canada, no one pays taxes on the first $15,705 they earn this year. However, some people wrongly believe that if they earn $15,705 or less, they don't need to file their taxes.

Why should I file a tax return?

You might be thinking, “I barely earned any money or none at all, why would I need to file taxes?” Filing your taxes unlocks financial perks like the:

• GST/HST Credit: A rebate of some GST/HST you’ve paid from purchasing goods and services sold in Canada, which can mean hundreds of dollars back in your account – up to $533 a year for single taxpayers with no dependents. It’s paid in quarterly payments, so you’ll get cheques from the government every three months with this one.
• Canada Carbon Rebate: This is a refundable (money back) credit for residents of most provinces to offset carbon taxes you pay in your day-to-day life. This credit is sent out every 3 months, like the GST/HST Credit. This can be anywhere from $380-900 annually for a single person, depending on the province you live in. Those who live in rural areas outside of city centres get an additional 20% back! Check out this blog to learn more about the Canada Carbon Rebate.
• Canadian Dental Care Plan: This past year, the Canada Dental Care Plan officially came into effect, which is amazing for people who aren’t covered under their own or their parent’s insurance plans. If your household income is under $90,000, you’ll get at least some of your dental work covered. But filing is essential to access this and government programs like this. Check out this blog to learn more about the Canadian Dental Care Plan.
• Disability Tax Credit: For those with disabilities, the Disability Tax Credit is especially valuable. It reduces the amount of taxes you owe and can even help you access additional federal and provincial programs. And for Canadians between the age of 18 and 64, a new Canada Disability Benefit  is set to launch in July 2025 , providing up to $200 per month to those who qualify.

Filing also allows you to build up Registered Retirement Savings Plan (RRSP) contribution room to be used in the future.

How do I save money and reduce the amount of taxes I need to pay?

Getting the most out of your tax return starts with knowing what you can claim. Claiming all the benefits and credits you’re eligible for will reduce the amount of income taxes you owe and, in most cases, for teenagers and young adults, result in a refund. Here’s a fun fact – 85% of students who filed returns with H&R Block last tax season received a refund, and the average amount was more than $1,500^*. 

Here are some ways to maximize your return:

1. If you’re a college or university student, claim your tuition. Use your T2202 Tuition and Enrollment Certificate to claim eligible tuition fees. This certificate can usually be found on your student portal where you can find proof of enrollment. If you don’t use the full credit, you can carry it forward to put towards taxes next year.
2. Track your moving expenses: If you moved over 40km away for school or work, you may be able to deduct moving costs like transportation, storage, and temporary living expenses.
3. Include your scholarships and grants: Most scholarships and grants are tax-free, so be sure to report them with the help of an H&R Block Tax Expert.
4. Stay organized: Gather all of your documents, like T4s from employers, T2202 certificates from school, and receipts from eligible expenses. Keeping everything in order makes filing faster and easier.

How do I file my tax return?

First, gather all your slips and receipts. You can use our handy tax checklist to make sure you have everything you need. If you earned income this year from a part-time job, your employer would send you a T4 slip outlining your earnings for the year. If you worked several different jobs, you would receive a T4 from each one. 

​Income earned from freelance work or tips, would need to be claimed in addition to what’s already marked on your T4. It’s important you keep a record of the tips you earned throughout the year. If you have a side hustle, like selling crafts on Etsy, you’d also need to keep track of your income.

You can have a Tax Expert file for you or tackle it yourself with our tax software. At H&R Block, students file for less!^{^} Book an appointment by finding an H&R Block office near you, or have one of our Tax Experts help you from home. If you’re under 25, you can file with H&R Block’s tax software for free^**.