Claiming Child-Care Expenses

Who can claim child-care expenses?

You must meet the following eligibility requirements to claim child-care expenses on your tax return:

1. Age and dependency of the child. To be eligible, the child must meet any of these 2 conditions:

• The child is under 16 years of age at any time in the year.
• The child (of any age) has a physical or mental impairment and is dependent on you or your spouse/common-law partner.

2. Relationship and income. You can claim the expense for your child or your spouse/common-law partner's child. Alternatively, you can claim the expenses if the child was dependent on you or your partner and had a net annual income of $15,000 or less.

3. Reason for child care. You paid someone to look after the child so that you or your partner could:

• earn income from a job
• operate a business alone or as an active partner
• conduct grant-funded research or similar work
• attend a full-time or part-time educational program

4. Residency and location of child care. Typically, you're only eligible if the child-care services were provided in Canada by a Canadian resident while the child lived with you or your spouse/common-law partner.

However, if you lived outside Canada for part or all of the year, and the CRA considers you to be a factual or deemed resident, you can still claim child-care expenses paid to a non-resident person for services provided outside Canada.

Note: People who immigrated to or emigrated from Canada can claim child-care expenses only for the period they lived in Canada.

5. Support for the child. To meet this condition, you need to be the sole supporter of the child for the time they live with you. Alternatively, you can also claim it if another person who lived with you at any time during 2023 and in the first 60 days of 2024 is:

• the child's parent
• your spouse or common-law partner (if you are the father or mother of the child)
• eligible to claim the Canada Caregiver Credit or line 30400 for the child

Once you meet the aforementioned requirements, the next step is to get familiar with line 21400.

What is line 21400 on the tax return?

Line 21400 is the specific line on your T1 tax return where parents and guardians can claim child-care expenses. These expenses are the amounts you pay to have someone else look after a child so you can earn income, attend school, or carry out research under a grant.

If you meet the eligibility criteria, you can claim these expenses as a deduction on your personal income tax return.

Which parent usually deducts child-care expenses?

If you're the only person supporting the child, you can claim all the eligible expenses. You can calculate the amount by filling out Form T778, Child-Care Expenses Deduction.

If you lived with another person (the child's parent, your spouse/common-law partner, or an individual claiming an amount for the child), the person with the lower net income (including zero income) must claim the expenses. However, if the higher-income person meets any of the exceptions in Part C of Form T778 or were enrolled in an educational program, they may claim the expenses. If both of you have equal net incomes, you must mutually agree on who will claim the expenses.

In cases of separation or shared custody, the following guidelines apply:

1. If you and your spouse or common-law partner separated during the tax year and did not reconcile within 60 days after year-end, only the individual who resided with the eligible child can claim the expenses.
2. When parents share custody, each may claim child-care expenses, but only for the periods during which the child resided with them. Each parent can only claim their own expenses, not a shared amount.
3. If one parent pays the full amount of child care but is partially reimbursed by the other, the paying parent claims the expense minus the reimbursement. The reimbursing parent can claim the amount they paid back as long as it does not qualify as a support payment.

What child-care expenses can you claim?

Here are the different child-care costs you can claim.

• Payments made to licensed daycare centres or nursery schools.
• Wages paid to a nanny or caregiver.
• Fees paid to educational institutions for child care.
• Fees for day camps and day sports schools.
• Costs for boarding school, camps, or overnight sports schools (only the portion related to child care).
• Any Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums you paid to an individual for providing child care in your home.

Quebec residents can also claim the basic contribution they paid to a subsidized child-care program that offers reduced rates for child-care services.

What's the maximum amount you can claim?

The maximum amount for child-care expenses you can claim depends on the child's age at the end of the year and whether they have a disability. Let's look at the amounts you can claim in each scenario:

• Up to $8,000 for each child under seven years of age.
• Up to $5,000 for each child up to seven years and under 16 years of age.
• Up to $5,000 for each child over 15 years of age who has a disability but does not qualify for the Disability Tax Credit.
• Up to $11,000 for each child who qualifies for the Disability Tax Credit, regardless of age.

What are the expenses you cannot claim?

When claiming child-care expenses, it's important to make sure you don't include the following costs:

• fees paid for regular schooling, private tutors, or educational programs
• child-care services provided by relatives, such as grandparents or siblings
• expenses related to medical or health care for the child
• fees for sports, arts programs, or other extracurricular activities (some provinces still offer their own tax credits for children's fitness, arts, or related activities, for example, Manitoba's Fitness Tax Credit)
• costs for transporting the child to and from the child-care provider
• general household expenses, such as utilities, rent, or mortgage payments

You cannot claim child-care expenses for which you or another person receives a reimbursement or any other form of assistance that is not included in your income. This assistance can include government subsidies, grants, or financial support from employers or other organizations.

How to claim child-care expense deductions

First, make sure you're only including expenses paid in the current tax year. For example, on your 2024 tax return, you can only claim amounts paid in 2024. Next, calculate your allowable deduction by completing the following parts of Form T778:

• Part A to determine the total child-care expenses.
• Part B to determine the basic limit of child-care expenses.
• Part C if you are the one with higher net income and meet any situation described.
• Part D if you were enrolled in an educational program.

Then, enter the allowable amount on line 21400 of your T1 Return.

It's important to keep all supporting documents, such as receipts from child-care providers and the Social Insurance Number (SIN) if an individual provided the service. These documents are crucial in case the CRA requests verification.

Claim every credit with confidence

Claiming child-care and related expenses can get confusing. To make sure you make the most of your deductions, TurboTax can help you file taxes accurately and smoothly.

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