Why Students Should File Tax Returns (It's Free Money, Silly)

As a student you've spent little, if any, time working. So, why should you file an income tax return? Simply put: free money.

More likely than not, if you file a return, you'll get money from the government, because tax returns are used to apply for several credits and programs. Those 19 or older will start receiving the GST/HST credit, a cheque sent quarterly to those who qualify. Other credits accrue just for being a student. Many of these can be banked for later use, when you have more income and want to reduce your tax burden. Or you can transfer them to parents, grandparents or guardians who already have a greater tax burden.

Students who held only a summer job will probably not have made enough to pay taxes, so if you file, it's highly likely you'll be refunded taxes held back from your paycheque. Poof! Free money.

You can file in later years, and still get your refund. But the longer you wait, the bigger the hassle tracking down the right forms and paperwork. Worse, in the unlikely event you do owe money, it's less painful to pay up now, even if you have to do so in $25 increments. You'll have to pay interest *and* a penalty if you find out later that you owe money.

So, how do you do it?
You can pay a professional to do it for you. Many tax preparers will offer student specials -- you should be able to find one for less than $30. Often a lot less.

If you're unable to pay a preparer, the Canada Revenue Agency (CRA) operates the Community Volunteer Income Tax Program. They will handle only simple cases, however, and this time of year they will be swamped. You may also be able to find tax clinics at your school or student union.

For those willing to learn how to do it, the easiest and most convenient way is to file online. All you need is a browser and Internet access. Note: If the only computer available to you is in the library or computer lab, be sure you know how to purge your session data, because public computers are inherently insecure.

There are 12 ways to file online listed on the CRA site and almost all are free to low income filers. But two have versions specifically for students. Quicktax has a free version aimed at students who have earned up to $20,000 in 2009. And Canadian-owned UFile.ca has partnered with the Canadian Federation of Students to offer free filing to students. There are no limitations, as long as you attended school for at least one month in 2009.

Both use an interview style interface that's almost painless for first timers. You can log off and log back in to complete your return at any point.

With all of these methods available, there is no reason not to file. Go get your free money!