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Your guide to family tax credits and deductions
Don't stress! Save money this tax season with these (sometimes unexpected!) benefits for Canadian families
It’s that time of year again — your mailbox is full of many perforated forms and notifications from every financial institution with which you do business. Yes, it’s tax time, but you can minimize the tax hit with our list of deductions and credits often available to families with minor children.
FEDERAL TAX CREDITS
Children’s Arts Credit
This credit, new for 2011, allows parents to deduct 15% of the cost of arts programs, to a maximum of $500 per child, from their tax bill — a potential savings of $75 per child. The minor must have been younger than 16 at the beginning of 2011. Permitted programs must focus on artistic, cultural, recreational or developmental activity, such as:
- literary arts
- visual arts
- performing arts
- music
- media
- languages
- customs
- heritage
- wilderness and the natural environment
- interpersonal skills training or
- tutoring
This credit can be split between the parents to achieve the greatest tax reduction, and is in addition to the federal children’s fitness credit, discussed below. (The same program expenses cannot, however, be used to claim both this credit and the fitness credit). You will need a receipt from the program provider.
Children’s Fitness Credit
This credit allows parents to deduct 15% of the cost of fitness programs, to a maximum of $500 per child, from their taxes – once again, a potential savings of $75 per child. As with the arts credit, the fitness credit may be split between the parents and the child must be under 16 years of age. Permitted programs must include a significant amount of physical activity contributing to cardiorespiratory endurance and also focus on one or more of muscular strength, muscular endurance, balance or flexibility. Obtain a receipt for your file.
Public Transit Tax Credit
A parent can take a tax credit equal to 15% of the cost of public transit passes used by the parent, his or her spouse and/or children under the age of 19. There are lots of requirements to using this credit – see this Canada Revenue Agency page for more details. Make sure you keep your receipts and passes!
Child Care Expense Deduction
Repeat after me: we love deductions! Credits are wonderful, but the tax reduction for credits is calculated using the lowest tax rate, whereas the benefit of a deduction increases along with your tax rate.
This particular deduction must be taken by the spouse with the lower income (which includes having zero income), and cannot be greater than 2/3 of that spouse’s earned income. There are other limits — the child care expense deduction cannot be more than $7,000 per child 6 years old or younger, and maxes out at $4,000 for each child between 7 and 16 years.
Don’t forget that this deduction encompasses more than just daycare and nanny expenses. Also included are amounts paid for:
- day camps
- the child care component of private school tuition
- boarding schools (weekly maximums apply) and
- overnight camps (weekly maximums apply)
Don’t forget to file form T778, Child Care Expenses, with your income tax return, and you must also obtain a receipt showing the information required by the form about the services provided. If the services were provided by an individual, you will need the individual’s social insurance number.
Child Tax Credit
This credit is hard to miss – for 2011 it’s worth around $320 per child under 18 years of age at the end of 2011.
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What do you think?
Cristina (not verified) says ....
in June, I wrote an altcire, Homebuyer Tax Credit to be Extended? Expanded? That altcire linked to five bills that were circulating in the House and Senate that would either
linlal says ....
The parents in that photo aren't doing their daughter any favours with the faces they're making. Unless their intent is to teach her to be afraid of the "horrors of income taxes", of course.
Most Canadian families have income from only a few sources and a limited number of deductions. They would be perfectly capable of doing their own taxes if the folks who profit from 'helping' them - for a fee - hadn't built up the myth that it's difficult. It's simply a matter of reading the guide that comes in the tax package and then walking through the tax form line by line, filling out the parts that apply to you.
That photo is a bit over the top, don't you think?