Your Tax Return Does Not Belong to You

Isn’t it great?  You finish school and are finally making some money.  You are finally in a position where you make enough money to be taxed.  What a life.  Then you discover that you have all these education credits!  Unused!  You file your taxes at H&R Block like a champ and then greedily wait for that cheque to come in.  What are you going to do?  Take a nice vacation?  After all, you are working hard, you deserve a break!  Buy a new bedroom set? After all, you need to look like an adult at work!  Go to Hold Renfrew? I deserve this treat and I have been really eyeing these new sandals.

No.  None of the above.  THIS MONEY DOES NOT BELONG TO YOU.

“What?” you ask? “How can that be?  I worked hard.  I get the tax return cheque. The government puts no restrictions on what I do with this money, so why should you?  I hate reading this stupid blog.  You are stupid and pretentious and think you are so moral with your savings ways.  Get bent.”

A fair reaction.  I don’t blame you.  But I am telling you, the tax return doesn’t belong to you.  It belongs to the student loan.

How does one come to this conclusion?  It is actually alarmingly straight forward, but because the government likes us to make decisions for ourselves and most student loans are really private bank loans at a decent interest rate, we usually end up spending our tax return on hookers and blow, or whatever the going vice and associated drug is these days.  For the record, my friends seem to prefer Holts and wine, but its really all the same problem.

Do you remember when you took out that student loan?  What did it pay for?

Courses.  Fees.  If you were lucky, rent!

When you filed your tax returns when you were a student (if you did – otherwise, you have a lot of work to do) what did you get from the University/College to help fill in the forms?  A little T2202A that outlined what you had paid in fees that year.  You included that, as well as the credit for the months you were in school for (full time or part time) and you didn’t look at the forms ever again.  Because back then, you didn’t use your credits.

Fast forward to post-graduation when you are receiving a real paycheque.  All of a sudden Troung and H&R Block is telling you that $7,000 is coming your way.  Now for all that money you spent on post-secondary education, SOME of it is coming back to you.  I can’t emphasize this enough.  Even in the best case scenario, you are only using the credits to decrease your total income.  You don’t get the credits back dollar for dollar.  The $20,000 credits will decrease your income, and so those taxes you paid will be returned.  About 40% depending on your tax rate and salary.

So you already used this money.  You used it on COMS 201, LAWS 491, ENGG 345 – its been used.  You took out the loan for it.  Now, you got some credits for spending all that time and money back in the day.  So that money in the tax return isn’t yours.  It belongs to your student loans.  It belong to past, poor you, who if you had the money would have paid for school yourself.

Every time you get a tax return over $50 do this – treat yourself to keeping $100 for something. I am not an animal.  I am not unrealistic.  Its cruel asking for somebody to fork over all that cash when all your friends are stopping at Holts.  But take the $100 and the rest – it should all go to your loans.  The education credits were never yours in the first place.