Tax Considerations For Parents
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Financial responsibilities and obligations are just one of the many things to consider when having children. From soccer programs, meals every day to school tuition for college or university, parents are faced with countless expenses when it comes to their children. Luckily, the Canadian Government recognizes the financial stress faced by parents when it comes to raising children. There are many tax credits and deductions parents can apply for to help offset the costs of raising children.
Deduct and Claim Your Child Expenses
The child care expenses deduction is taken away from gross income if you use daycare or babysitters during your time at work or school. Depending on the child’s age, eligible deduction amounts vary per year. Furthermore, if your child has a disability, those expenses can be deducted as well, provided they meet the Canada Revenue Agency’s criteria.
Find out which receipts you should keep to file your taxes.
Here are a few examples of expenses that you can deduct related to caring for your child:
- Services from nannies and babysitters
- Daycare centers and nursery school
- Childcare services from educational institutions
- Sports programs during the day and other day camps with a primary childcare function
- Any type of boarding school or overnight camps
- Advertising costs to locate a childcare specialist
Check out these tax tips for low income earners.
Medical Expenses For Your Children
Medical expenses for your children can be claimed as a deduction on your taxes. Additionally, you can claim birth-related expenses that were not covered perhaps by your provincial health plan or health insurance. When claiming medical expenses, keep in mind that:
- The amount of money you can claim as medical expenses is capped at either $2,397, or 3% of your dependent’s net income, and
- You can only claim medical expenses that you paid for, not your health insurance company.
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Canada Child Benefit
The Canada Child Benefit is a non-taxable benefit for eligible families to help cover the cost of raising children under the age of 18. Paid upon registering after a child’s birth, the benefit stops automatically upon the child’s 18th birthday. Eligible parents must file income tax returns together to receive this benefit each year. If you are a single parent, the custody-bearing parent is the only parent who receives the benefit. In situations of shared custody, the benefit is split usually in half, or in another way depending on the custody agreement.
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To be eligible for the Child Disability Tax Credit Benefit, you and your child must meet the following qualifications:
- You live with your child
- Your child is under 18 years of age
- You must be the person primarily responsible for caring for and bringing up the child
- You must be a Canadian resident
- You or your spouse or partner must meet be either a(n):
- Canadian citizen
- permanent resident
- temporary resident
- protected resident
For more information regarding eligibility, see the CRA’s website.
To calculate how much money you can receive through the Canada Child Benefit, check out the CRA’s claims calculator.
Child Disability Benefit
The Child Disability Benefit is also a non-taxable monthly benefit to parents that care for children with severe physical or mental impairments. In addition to receiving the Canada Child Benefit, parents with children that have disabilities are also eligible for the Child Disability Benefit. Eligibility requirements include those listed above for the Canada Child Benefit, as well as the following:
The child must be either
- Restricted in a minimum of one basic activity of daily living
- Significantly restricted in two or more basic activities of living
- Need life-sustaining therapy
The child’s impairment must also meet all of the following requirements:
- Have lasted or expected to last for a minimum period of 12 months
- Be present all or most of the time (minimum 90% of the time)
Depending on the severity of the child’s impairment, the amount of money a parent can receive varies. For the period of July 2020 to June 2021, you could get up to $2,886 ($240.50 per month) for each child who is eligible for the disability tax credit.
Children Activity Benefits
There are tax benefits parents are eligible to apply for regarding children’s activities, such as fitness.
Quebec Tax Credit for Children’s Activity – Parents can claim a refundable tax credit for costs incurred for fitness, cultural, or artistic activities for each of their children.
Yukon Children Fitness Tax Credit – Parents can claim up to $1000 on money paid for fitness programs for their children.
Manitoba Fitness Tax Credit – Parents can claim up to $500 for money paid for fitness programs for their children.
Don’t Forget Your Provinces Tax Benefits
Each province offers their own tax benefits for parents caring for children, in addition to the Canada Child Benefit and Child Disability Benefit. The chart below outlines the benefit amounts for each provincial program. Make sure to check each link to learn more about eligibility.
|Province||Type of Benefit||Amount of Benefit Each Month For The First Child($)|
|Alberta||Alberta Child and Family Benefit (ACFB)||Up to $110.83|
|Ontario||Ontario Child Benefit (OCB)||Up to $121.75|
|Quebec||-Supplement for School Supplies|
|-Up to $104|
-Up to $2,515 per year
|New Brunswick||New Brunswick Child Tax Benefit (NBCTB)||Up to $20.83|
|Nova Scotia||-Nova Scotia Child Benefit (NSCB)|
-Nova Scotia Affordable Living Tax Credit (NSALTC)
|-Up to $77.08|
-Up to $60 per year
|British Columbia||-BC Early Childhood Tax Benefit |
-BC Child Opportunity Benefit
-BC Climate Action Tax Credit
|-Up to $55 |
-Up to $133.33
-Up tp $51 per year
|Saskatchewan||Saskatchewan Low Income Tax Credit (SLITC)||Up to $136|
|Prince Edward Island||Prince Edward Island Sales Tax Credit||Up to $55|
|Newfoundland and Labrador||Newfoundland and Labrador Child Benefit||Up to $60|
|Yukon||Yukon Child Benefit (YCB)||Up tp $68.33|
|Northwest Territories||-Northwest Territories Child Benefit |
-Northwest Territories Cost of Living Offset
|-Up to $67.91|
-Up to $180 per year
|Nunavut||Nunavut Child Benefit||Up to $27.50|
Saving For Your Child’s Future
When you start saving for the future education of your child, the Canada Revenue Agency deems the savings plan an RESP, or a Registered Education Savings Plan. This plan allows your investment in your children’s education to grow without having to pay taxes on it. The government, specifically the CRA, also gives you an incentive to invest by paying a total of $7,200 over the course of the savings plan. Financial experts recommend parents start an RESP early on, as post-secondary education costs continue to rise in the tens of thousands of dollars.
Raising children is no easy feat, and the financial implications can be quite burdensome. Make sure you conduct ample research to learn every tax benefit and deduction you are eligible to apply for when it comes to your children.
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