A lot can change in a year—especially when it comes to families and taxes. To make refund season less confusing, we put together a guide to the 2014 family tax credits, including important changes you should note when filing this year.
Family Tax Cut
This new tax cut applies to families with kids under 18 in which one partner earns a higher income than the other. Effective for the 2014 tax year, the higher-income partner can now transfer up to $50,000 of taxable income to his or her partner, which may give the higher earner a tax credit of up to $2,000, depending on the spread between the couple’s income levels.
Learn more about the Family Tax Cut>
(Looking for an easy way to claim the Family Tax Cut? Get it here.)
Children’s Fitness Tax Credit
The maximum amount you can claim on children’s fitness expenses has doubled, from $500 to $1,000 per child. Parents will receive a 15 percent tax credit for every dollar spent on a kid’s fitness class, sports registration, etc., which means the maximum tax refund you can now receive is $150 per child.
While you don’t need to send your receipts in with your tax return, you’ll need them if you’re audited, so hang on to them.
Learn more about the Children’s Fitness Tax Credit>
Children’s Arts Tax Credit
Like last year, parents can claim up to $500 per child under age 16 for ongoing programs and classes that focus on artistic, cultural and developmental activities—think classes in literary and visual arts, performing arts, music, media, languages, wilderness and natural environment, and more.
Remember: This claim is in addition to the Children’s Fitness Tax Credit (see above), which means you cannot expense the same program in both categories.
Enhanced Universal Child Care Benefit (UCCB)
The Universal Child Care Benefit (UCCB) is increasing starting January 1, 2015. The UCCB—which is taxable—will benefit parents in two ways:
- Parents with kids under six years of age are now eligible for a maximum benefit of $160 per child each month (up from $100 in 2014). If you qualify for the maximum amount, you’ll receive $1,920 per child by the end of the year.
- If your kids are older (between six and 17 years old), you can now receive a new $60 benefit per child per month, which adds up to a total of $720 per child at year’s end.
If you’re already receiving the Canada Child Tax Benefit (a tax-free monthly payment made to eligible families), you’ll automatically receive the UCCB, too.
Note: Don’t expect to receive the increase in the UCCB payments until July 2015. While the updated benefit kicked in on the first of the year, payments won’t be made until summertime, when parents will receive a lump sum for the first half of 2015, after which payments will be made monthly.
(Psst! Is this your first year claiming the UCCB? You’ll have to fill out an application form, which can be found here.)
Family Caregiver Tax Credit
If you are a caregiver for a spouse, partner or family member with a mental or physical impairment, you may be eligible to claim up to $2,058 for a non-refundable tax credit of up to $309.
An eligible dependent must earn little to no income and be fully dependent on your care (for example, if your or your spouse/partner’s elderly parent lives with you and requires care, if your child uses a wheelchair, or if your spouse has fallen ill.)
If you’re already claiming the Eligible Dependent Credit (see below), you can still qualify for the Family Caregiver Tax Credit.
If your dependent is a child, this amount is in addition to the amount you can claim for children under 18.
Eligible Dependent Credit
In order to qualify for this amount, you must be the sole supporter of a dependent who was living with you in 2014—meaning you do not have a spouse or common-law partner or you were not living with or being supported by a spouse or common-law partner. The dependent must be your parent, grandparent, child, grandchild or sibling (by blood, marriage, common-law partnership or adoption). In the case of a child, grandchild or sibling, the individual must be under 18 years of age or have a mental or physical impairment.
There are many qualifying criteria and exceptions to this credit, so visit the Canada Revenue Agency’s website for full details.
Public Transit Tax Credit
If you, your spouse and/or your kids under the age of 19 purchased public transit passes in 2014, you can claim them. This applies to monthly passes, as well as shorter passes if the passes allowed you to travel unlimited for 20 days within a 28-day period. If you used electronic payment cards, you must have taken 32 one-way trips per month in order to claim the value for this credit.
Be sure to hang on to all receipts as well as your actual passes—those are necessary in order to claim this expense.
Medical Expenses Credit
There is a long list of medical expenses that are eligible for tax credits, including some fertility treatments and prenatal and postnatal treatments. You can also claim eligible medical expenses for dependents.
Adoption Expenses Credit
If you adopted a child under the age of 18 in 2014, you can claim up to $15,000 in adoption fees per adopted child.
Adoption fees include money paid to a licensed adoption agency, court and legal costs, document translation, necessary travel expenses, mandatory fees required by a foreign institution and for immigration purposes, plus any other fees required by the provincial or Canadian government. Get more details about eligible adoption periods here.
Child Care Expense Deduction
To qualify for this credit, you must have paid another person to care for your child so you could do one of the following: earn income from employment, conduct your own business, attend school or perform research under a grant.
You can claim up to $7,000 per child six years old or younger, and $4,000 per child aged seven to 16. However, if your child has a physical or mental disability, you can claim up to $10,000.
Aside from daycare and nursery school payments, the deduction also considers payments for boarding schools, day camps, overnight camps, nanny services and more. Visit the CRA’s website for a complete list of eligible claims.
If you have a partner or spouse, the person with the lower net income (including zero) must file the claim. The amount claimed cannot be greater than two-thirds of that partner’s earnings.
Child Tax Credit
This tax credit for parents of kids under 18 years has been replaced with the enhanced UCCB as of the 2015 taxation year.
Note: The Child Tax Credit is not to be confused with the Canada Child Tax Benefit. While the Child Tax Credit is being replaced by the enhanced UCCB (get more information here), the Canada Child Tax Benefit remains in effect.
Want to learn more? Tap into books, courses and smart tips to help with your tax literacy at knowledgebureau.com