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It's income tax season, and various tax experts are vying for media attention, so they can generate some exposure. My favourite pitch so far is a list sent by H&R Block of the most embarrassing questions its employees have been asked. The questions are presented below, along with answers from H&R Block. The lesson here is that there are no stupid tax questions. If you don't ask, you may lose out on potential savings.
Q: I suffer from Inflammatory Bowel Disease and was told by my doctor to take Imodium. Can I claim this expense on my taxes?
A: Unfortunately, you can't claim over-the-counter medication, even if it was recommended by a doctor. However, prescription medications can be claimed, so consider speaking to your doctor about options.
Q: I'm a model and am encouraged by my agents to get monthly spray tans and bikini waxes. Can I claim this?
A: If your employer requires you to pay for the cost of a spray tan or bikini wax as a condition of your income, then you can claim those expenses. As well, any items required specifically for a photo shoot are tax-deductible, such as eyelash extensions. However, in order to make these claims you will need a signed Declaration of Conditions of Employment (T2200) indicating you are required to pay these expenses.
Q: I moved across the country for a job offer but had to make special travel arrangements for my three pet tarantulas, can I claim that?
A: You certainly can! Moving expenses incurred by all members of your household, including pets, can be claimed as a result of a job offer, but keep in mind that expenses are deductible only from employment or business income earned at the new job location.
Q: My boyfriend's six-year-old son and that child's half-sister (who is not related to my boyfriend) just moved in to our apartment. Can I claim the Canada Child Benefit (CCB) for them even though I'm not related to either child or married? Help!
A: Related or not, if you and your boyfriend now have primary care and responsibility or shared custody of the children you can apply to receive the CCB by completing the Canada Child Benefits Application form (RC66)
Getting answers to questions like these is part of the value of using an accountant or tax preparer. If you're one of the many people who take a DIY approach to taxes by using software or completing your return online, see if your service provider offers an online Q&A forum. H&R Block does for its tax software (you can download the basic version for free), as does TurboTax. Here's contact info for the Canada Revenue Agency in case you want take your questions to the ultimate authority.
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Rob's personal finance reading list…
How a shopping ban can reset your financial life
The New York Times talks to Canadian personal finance blogger and author Cait Flanders about how placing a temporary halt on buying new stuff (non-essentials) can help you get control of your finances.
Do you have an adviser, or an investment sales person?
My favourite in this list of ways to be smarter about consuming investment advice: "When something is being offered to you on the basis of cachet, be wary, not flattered."
A bestselling new personal finance book
A Q&A with Shannon Lee Simmons, author of Worry-Free Money: The guilt-free approach to managing your money and your life. Ms. Simmons is a fee-for-service financial planner, which means she gets paid for advice, not selling products. She's noticed a lot of anxiety about money in her clients, and the book is an attempt to address that.
Trump's true believers can't get enough of the stock market
Financial advisers in parts of the United States that supported Donald Trump in the last election report that clients are throwing themselves into the stock market with abandon. The reason: They see the president as having built the stock market rally that began after his election, and they expect more good times ahead. In putting together the latest instalment of the Globe and Mail ETF Buyers' Guide, I was blown away by the huge returns delivered in recent years by U.S. equity funds. Those numbers aren't sustainable.
Today's featured financial tool
Here's a tool I use a lot – the national house price map produced by the Canadian Real Estate Association. Compare price changes for your city against others from St. John's to Victoria.
Ask Rob
The question: How should an retired investor manage their investment portfolio if a full blown trade war/dissolution of NAFTA occurs? What industries do you recommend? What percentage of equity/fixed income?
The answer: The basic rules of diversification should guide your investing in all circumstances, including a trade war. Weight your holding in bonds according to your age and need to protect your capital. Mix the stocks or equity funds in your portfolio between Canada, the United States and internationally (one-third in each is a starting point). The point of this kind of diversification is to ensure you have exposure to different countries, sectors and asset classes, without being too focused on any particular area. That's your protection against a trade war, and all other market risks.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length.
Featured Video
Carrick Talks Money: Where are younger investors putting their money?
What I've been writing about
- Where did higher rates for savers go? Right to the banks’ bottom line
- Don’t delay if you want to lock in a 3% yielding GIC (for Globe Unlimited subscribers)
- The 2018 ETF Buyer's Guide: Best U.S. equity funds (for Globe Unlimited subscribers)
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Rob Carrick