Reporting taxes on summer student jobs – Everything you need to know.

Ah, summertime! It used to mean hanging out with friends, spending the day on a lake or playing video games. But that was back in elementary school. Once high school or university comes around, summers mean finding a balance between having fun and earning money. When it comes to filing taxes for a summer job, how much does it differ from full time employment, including credits and benefits you might now be entitled to? We’ve broken down what a summer job means to your taxes to help you keep as much money in your pocket as possible!

What income do I need to report as a summer student?

Whether you’re a full-time employee, part time, seasonal or occasional, income earned should be reported to the Canada Revenue Agency (CRA). Your company is also informing the CRA of the money they paid you through a form called the T4, which they’ll also send to you around February for the previous year’s earnings.

If you work somewhere where earnings wouldn’t show up on a T4 slip, such as tips from a restaurant job, it’s your responsibility to keep track of how much you earned in tips and report that amount to the CRA as well.

However, if you earn under the basic personal amount (which was $13,808 for 2021 taxes), you likely won’t have any taxes owing and therefore aren't required to file. But if legally you aren’t required to file, there are other reasons to do so, including receiving the quarterly GST/HST tax credit if you’re 19 or over, which could bring you another $467 per year. Also, if the company deducts Canadian Pension Plan (CPP) funds from your paycheque, you’re likely to get some of that back with your refund.

Another plus is that as soon as you start reporting earning income to the CRA, you can start building up room in a Registered Retirement Savings Plan (RRSP). Even if you don’t start contributing then, your eligibility starts, so in later years you can contribute more than the maximum to fill up the room you started to accumulate on your first job!

What about those students who take jobs across the country – or – at least far away?

A lot of students take summer jobs at resorts, camps, tree planting or other jobs where they live away from home, and that can mean some extra expenses. But what of this can be claimed as expenses on your tax return?

The answer is that it depends. One of the requirements for being able to claim moving expenses is that you have to move more than 40 kilometers from your place of residence. So, for example, if you got a job tree planting and they provided temporary accommodations at a camp, this requirement would not likely be met – especially if you returned to live at the same address as you were living before. However, if you were renting out your own room at the place where you were working and got a new address when you returned to where you're going to school, you will have likely met this requirement.

So, assuming you're eligible to claim moving expenses, what exactly can you claim? The major expense is usually the cost of transportation, including the cost of moving your personal effects. This can be claimed in full, regardless of whether you flew or took a bus or paid someone for a ride. If you used your own vehicle, you have the choice of either claiming your actual expenses (the detailed method) or claiming a flat per kilometer amount (the simplified method), and FYI, using the simplified method means you don’t need to hold onto receipts, so it’s often the preferred method. The rate you use depends on the province where your trip originated. For example, for 2021, if you left from Newfoundland to drive to your new city of employment, the rate was 58 cents per kilometer. However, if you left from Alberta, the rate was 51 cents per kilometer. The rates change every year based on the amount that federal government employees receive for travelling allowances.

You can also claim up to 3 meals a day while travelling. Again, you can claim the amount you actually spent, which would require you to keep receipts, or you can use a simplified method which allows you to claim a flat rate per meal. For the past several years, the flat rate has been $23 per meal regardless of where in the country the meal is purchased. You can also claim the cost of room and board in temporary accommodation for up to 15 days if you needed to stay in a hotel before finding somewhere permanent.

Now, let’s say you had to go out to this new city to interview or hand your resume out or find accommodations. This trip can’t be claimed on your taxes. Neither can the cost of renting a room for the entire summer. And if you have to pay a damage deposit on your rental accommodations, that can’t be claimed either. If you’re paying Canada Post to forward your mail, that’s also an expense on you. Good thing most important stuff is digital now!

Tricky math between how much you can claim and your income.

When you claim moving expenses, you’re limited in the amount you can claim by the amount of your employment income or, in the case of full-time students, taxable income from scholarships, bursaries, fellowships or prizes in your new location. When moving to the place where you're working for the summer, this won’t be a problem – your moving expenses aren’t going to exceed what you earned from your summer job. However, it could be a problem for the expenses you want to claim when returning to school. Scholarships, bursaries, fellowships and prizes are now usually fully exempt, so it’s unlikely that you’d have any taxable income you could claim your expenses against. If you can’t claim all of your moving expenses because of this rule, you can carry forward the unused portion to a future year. However, you'll still only be able to claim them against income earned at that location.

What about moving out of Canada?

Moving expenses incurred to move to another country are generally not deductible unless you remain a factual resident of Canada while you're away. However, even then, you would still need to meet the requirement of changing your residence within Canada – meaning you would have to return to a different address than the one you were living in when you moved.

Does the Labour Mobility Deduction for Tradespeople count for students?

For 2022 and subsequent years, a new deduction called the Labour Mobility Deduction for Tradespeople was introduced for tradespeople and apprentices in the construction industry who incur expenses for temporary relocations that don’t qualify as moving expenses because there was no change of residence. Unfortunately, there are no known plans to extend this deduction to students.

It’s an exciting time to be branching out on your own, earning your own money and figuring out the interesting world of Canadian taxes! And H&R Block Tax Experts know it all when it comes to student tax filing. If you need help, you can choose from one of four convenient ways to file: File in an Office, Drop-off at an Office, Remote Tax Expert, or Do It Yourself Tax Software.