Published: March 6, 2015
TaxCycle T1 optimizations run in the background as you enter information into the tax return so that as you complete each field, the calculation runs and updates the optimization.
The Optimizations worksheet allows you to see and customize optimizations for the taxpayer.
- At the top of the worksheet, select the type of optimization, or disable the optimization altogether.
- Any new filesyou create will default Maximize refund (you can change this default for this option in the New File options).
- Further down the worksheet, you can adjust settings for particular optimizations, for example:
- choosing the period for claiming medical expenses, or
- deciding which spouse will claim donations
How the calculation works
Optimization calculations run sequentially based on the credit ordering provision defined in the Income Tax Act section 118.92.
Expiring amounts are the exception to the calculation ordering. TaxCycle claims amounts set to expire first so that the taxpayer doesn't lose that credit. For example, if the taxpayer has donations remaining from a few years ago, it claims those first.
And, TaxCycle takes things even further by considering additional credits from Schedule 1, including:
- Overseas employment tax credit
- Federal dividend tax credit
- Foreign tax deduction under 20(12)
Once TaxCycle calculates the maximum refund, remaining amounts are carried forward to the following year (where applicable).
Family Tax Cut (Schedule 1A)
The Family Tax Cut section on the Optimizations worksheet:
- By default, TaxCycle automatically determines whether the couple is eligible for the tax cut. This is why the first Yes (or No) appears in calculated blue text.
- On the second line, you can choose whether or not TaxCycle decides who will claim the Family Tax Cut.
- If you choose Yes to this question, you cannot change the two checkboxes below. These are determined by TaxCycle calculations. If you choose No, you can change the selection to of whom receives the cut.
The settings on the Optimizations worksheet are mirrored at the beginning of Schedule 1A. Any changes you make here flow back to the Optimizations worksheet.
Here also, you cannot change the selection of who will claim the Family Tax Cut unless you first answer No to the question about automatically determining who claims the credit.
When TaxCycle calculates that a couple can claim the Family Tax Cut, a review message appears on the S1A for the spouse with the lower federal tax.
This caution message is informational, letting you know that "The Family Tax Cut has been calculated and is attributed to the spouse with the highest federal tax."
You must sign off this message before you can file the tax return by clicking the checkmark to the right of the message:
As this message is informational only, you can hide if for all clients if you prefer by clicking the Quick Fix lightbulb in the message and selecting Never show this message for any clients.
Pension Splitting (T1032)
View and adjust the pension splitting calculation in the Elected split pension amount section on the Optimizations worksheet:
- Disable the pension splitting optimization, if required.
- Choose whether TaxCycle determines which spouse is the pensioner and transferee. Or, turn off the automatic selection and specify the taxpayer yourself.
- Use the Alternate Election section to enter a pension transfer amount and see how it affects the return.
- Answer “Yes” to unlock the field for manually entering a pension amount and then put the amount in the field.