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Congratulations, you had a baby during the 2020 tax year! Or perhaps you are expecting, and curious how having a kid will affect your taxes.
The fact is, having a kid doesn’t affect your taxes a ton, but there are some things to know.
1. There’s no specific tax benefit simply for having kids.
2. You may have heard of tax credits provided for putting kids in sports and arts classes. There used to be, until recently. Parents were able to claim $500 per child under the children’s fitness tax credit, and up to $250 for things like learning a second language or math tutoring under the children’s arts tax credit. Sadly, these programs were cancelled a few years ago. (Blame Justin Trudeau.)
3. If one spouse stays home to watch the kids and earns no money, then the other spouse can claim a dependent tax credit.
4. There’s a tax deduction for parents who pay for child care. Note that the parent with the lower net income (including zero income) must claim the child care expenses, except in certain circumstances. Also of note: Fees related to leisure or recreational activities, like tennis lessons our the annual registration for Scouts, doesn't count as child care and can't be claimed.
5. Parents can sign up for the Canada Child Benefit, a tax-free payment from the federal government. The amount you get is based on your family net income. You'll receive your first payment within eight weeks of the government receiving your application online (or within 11 weeks of sending it by mail).