It’s that time of year again—your physical and virtual mailboxes are full of 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 2014 deductions and credits available to young families from the CRA.
Children’s Arts Tax Credit
This credit allows parents to deduct 15 percent 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 child must have been younger than 16 at the beginning of 2013 and the program must be “ongoing, suitable for children and supervised”—so little Billy’s crayon time at home doesn’t count. 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 and 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. (The same program expenses cannot, however, be used to claim both this credit and the fitness credit. Music and Movement, for example, could only count towards the arts credit or the fitness credit, not both.) You will need a receipt from the program provider.
Learn more about the Children’s Arts Tax Credit at www.cra-arc.gc.ca >
Canada Child Tax Credit
This credit is hard to miss—for 2013, it’s worth around $329 per child younger than 18 years of age at the end of 2013. A tax-free monthly payment made to eligible families to help them with the cost of raising children.
Learn more about the Canada Child Tax Credit at www.cra-arc.gc.ca >
Eligible Dependent Credit
A parent can claim this credit for one dependent child where there is no spouse (or if you do have a spouse or common-law partner you were not living with, supporting or not supported them). The credit is worth $1,623 federally if the child earns no income, and is in addition to the child amount. There are many T’s to cross for this credit, so please refer to cra-arc.gc.ca for more details. All provinces and territories offer a similar credit.
Learn more about the Eligible Dependent Credit at www.cra-arc.gc.ca >
Child Care Expense Deduction
This particular deduction must be taken by the spouse with the lower income (zero income included), and cannot be greater than two-thirds of that spouse’s earned income. There are other limits—the child care expense deduction cannot be more than $7,000 per child six years old or younger, and maxes out at $4,000 for each child between seven and 16 years.
Don’t forget that this deduction encompasses more than just daycare and nanny expenses. The following are also included: day camps; child care component of private school tuition; boarding schools (weekly maximums apply) and overnight camps (weekly maximums apply).
You will need 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.
Learn more about the Child Care Expense Deduction at www.cra-arc.gc.ca >
Some of the expenses associated with fertility treatments may be “eligible medical expenses” for tax purposes, including “prenatal and postnatal treatments” and “in vitro fertility program.” An eligible medical expense credit is available if such expenses incurred by you, your spouse and your children younger than 18 are greater than a minimum amount. This minimum amount is the lesser of a) three percent of your net income, and b) $2,152.
Speak with a tax accountant to determine which fertility treatment expenses are eligible—there are many complex rules associated with this credit. Your accountant can help you figure out which spouse should claim the credit. If filing a paper return, receipts must be attached.
Learn more about the Medical Expense Deduction at www.cra.arc.gc.ca>
Adoption Expenses Credit
Parents can take a 15 percent tax credit of a maximum of $11,669 in eligible adoption expenses per adopted child (a potential tax reduction of $1,716, which can be split between the parents). The credit is claimed in the year in which the adoption period for the child ends, being the later of: a) when the adoption order is issued or recognized by a government of Canada; and b) when the child first begins to reside permanently with the parents.
Please refer to cra-arc.gc.ca to determine eligible expenses. And hang on to your supporting documents!
Learn more about the Adoption Expenses Credit at www.cra-arc.gc.ca >
Family Caregiver Tax Credit
If you have a dependant living with you who has a physical or mental impairment, you may be eligible to claim up to $2,040 for 2013 and subsequent years.
The dependant must be 18 years of age or older and require care because of a physical or mental condition. If the child is younger than 18 years of age, their impairment must be indefinite and prolonged and the child must rely on you for assistance more so than other children of the same age.
Valid documentation provided from a medical practitioner is required.
Learn more about the Family Caregiver Tax Credit at www.cra.arc.gc.ca >
Public Transit Tax Credit
A parent can take a tax credit equal to 15 percent of the cost of public transit passes used by the parent, his or her spouse and/or children younger than the age of 19 by the end of the calendar year. There are many rules surrounding this credit—make sure you keep your receipts and passes!
Learn more about the Public Transit Tax Credit at www.cra-arc.gc.ca >