If you’re 65 years old or older, the Canadian federal government offers a helpful tax credit called the Age Amount. This credit can make a difference by lowering your taxable income, giving you some financial relief. Here’s a simple guide on the Age Amount tax credit, including who can get it, how to claim it, and how to calculate it.
What is the Age Amount Tax Credit?
The Age Amount tax credit is a benefit for Canadians aged 65 and above. For the year 2024, the credit is set at $8,396, an increase from $7,898 in 2022. This credit helps reduce your income tax by applying the lowest federal tax rate of 15% to the Age Amount.
Maximum Tax Credit
In 2024, the maximum federal tax credit you can get is $1,259. This is calculated by applying the 15% tax rate to the Age Amount of $8,396. Remember, this is a non-refundable credit, which means it can lower your tax bill but won’t result in a refund. Sometimes, you can transfer this credit to your spouse or common-law partner if needed.
Eligibility for the Age Amount Tax Credit
To be eligible for the Age Amount tax credit, you must:
- Be a resident of Canada.
- Be 65 years old or older by the end of the tax year.
- Have a net income below certain limits to qualify for the full or partial credit.
Income Thresholds
- If your annual net income is below $39,826, you can claim the full Age Amount of $8,396.
- If your net income is between $39,826 and $89,422, you can claim a partial credit. The amount decreases as your income increases.
How to Claim the Age Amount Tax Credit
You claim the Age Amount on line 30100 of your personal income tax return. Make sure to enter your age correctly in the “About You” section of your tax return to qualify.
How to Calculate the Credit
If your income is more than $38,508 but less than $89,422, follow these steps to calculate your Age Amount:
- Subtract $38,508 from your net income.
- Multiply the result by 15%.
- Subtract this number from the maximum claim amount ($8,396 for 2024).
For example, if your net income is $50,000:
- $50,000 – $38,508 = $11,492
- $11,492 x 15% = $1,724
- $8,396 – $1,724 = $6,672
You can claim $6,672 as the Age Amount on your tax return.
Transferring the Age Amount Credit
If you can’t use the full Age Amount credit, you can transfer the unused portion to your spouse or common-law partner. This way, the credit can help reduce their tax bill.
For example, if your Age Amount is $5,000 and your tax bill is only $2,500, you can transfer the remaining $2,500 to your spouse to help lower their tax.
How to Transfer the Credit
Your spouse or common-law partner can claim the transferred amount by adding it to their other payments and entering the total on line 32600 of their federal income tax return. There are no specific age or income requirements for the person receiving the transfer.
The Age Amount tax credit is a great way for seniors to reduce their tax bill. By understanding how to claim and transfer this credit, you can make the most of this benefit.
Who is eligible for the Age Amount tax credit?
To qualify, you must be a Canadian resident aged 65 or older by the end of the tax year and have a net income below certain thresholds.
How much is the Age Amount tax credit for 2024?
For 2024, the credit amount is $8,396.
Can I get a refund from the Age Amount tax credit?
No, the Age Amount is a non-refundable tax credit, which means it can lower your tax bill but won’t result in a cash refund.
What if I can’t use the full Age Amount tax credit?
You can transfer the unused portion of the credit to your spouse or common-law partner to help reduce their tax bill.
How do I claim the Age Amount on my tax return?
Enter the Age Amount on line 30100 of your personal income tax return and make sure your age is correctly listed in the “About You” section.