Child Tax, Credits & Deductions, Families, Tips & Advice

Family Tax Deductions: What Can I Claim?

Becoming a parent can be one of the most incredible experiences we have, but it can also be very stressful.  As parents, there is a lot to think about when having a child surrounding their health, well-being, and future, and of course, our financial responsibility for their care, feeding, and education.  To assist us with the costs of being a parent, the Canadian Revenue Agency (CRA) has provided a number of ways for families to save money through tax deductions and tax credits.

Canada Child Benefit

CRA offers Canada Child Benefit, which is a non-taxable benefit, for each eligible family to cover the cost of raising children under the age of 18. Children with disabilities will receive an additional amount for the Child Disability Benefit. The benefit is paid when you register the child after birth and will stop automatically when the child turns 18. You have to file your income tax return with your spouse/common-law partner to be able to receive CCB every year. For a single parent, the parent with custody is the one who receives the benefit. For shared custody, the benefit is either split in half or according to the custody agreement.

COVID-19 Impact on CCB

Canada Child Benefit is a tax–free monthly payments paid to families to help with the expenses of raising a child. Since CRA has extended the deadline for filing the income tax return, they also extended the CCB payments until September 2020. Ideally, you and your spouse/common-law partner have to submit your income tax returns every year to assess your eligibility for the CCB. If you haven’t submitted one for 2019, the payments will be assessed based on your 2018 income. You still have to submit your 2019 income tax return if you wish to receive the CCB after September 2020.

CRA offered a one-time increase in the CCB payments in May 2020 for those who received CCB in April 2020. Individuals were able to apply for up to $300 per child (max applications for two children per family). You are not required to report this income in your 2020 tax return.  Parents with shared custody who share the base CCB payments will share the increased payment.

Birth-Related Medical Expenses

All Canadian taxpayers can claim medical expenses that exceed the lesser of either the tax year’s threshold or 3 percent of your net income when you claim the medical expenses for yourself, spouse/common-law partner, and children under 18. However, if you are claiming the medical expenses paid for other dependents, you can claim the amount that exceeds 3 percent of their net income. Medical expenses are non-refundable tax credit, which means you can get a credit of 15 percent of the calculated amount against your taxes owed not resulting in a negative amount. You may include birth-related medical expenses that were not covered by your provincial health plan or your health insurance.

Eligible Dependent Amount

If you are a single parent, you may be able to claim the amount for an eligible dependent. Regardless of how many children you have, you can claim this amount for one child only. You can claim the full amount of the year of birth. If you have shared custody, only one parent can claim the amount. The amount is reduced by the child’s income from all sources such as CPP.

Canada Caregiver Amount for children under 18

If you have a child who has infirmity or disability, you can claim the Canada Caregiver Amount for your child or your spouse/common-law child. You can claim this amount for as many children as you have. For a single parent with shared custody, only the parent who claims the Eligible Dependent Amount will be able to claim the Canada Caregiver Amount for the same child.

Child Care Expense Deduction

Child care expenses deduction is a deduction from gross income that you may make if you use daycare or babysitters, while you work or go to school. There are annual limits that vary with each child’s age and, if your child has a disability, a higher limit may be available. Any disability must be approved by the CRA to claim benefits. with TurboTax Live we have live tax experts in your corner making sure that you get all the credits and deductions you deserve.

You can claim the following childcare expenses incurred in the tax year:

  • Caregivers such as nannies and babysitters
  • Day nursery schools and daycare centers
  • Educational institutions that provide childcare services
  • Day camps and day sports schools with a primary goal of childcare
  • Boarding schools, overnight sports schools, or camps where lodging is involved

You may also claim advertising or placement agency costs incurred to locate a childcare specialist. Click on this link for more information on other childcare expense deductions.

What important to note is that if you pay an individual person – such as a nanny or babysitter – for childcare, you must provide their Social Insurance Number as well as all related receipts. A good tip to follow is asking for these ahead of time instead of at the end of the year.

As a Canadian taxpayer, you can claim up to 2/3rds of your earned income, to a certain maximum amount per child’s age. You can find this amount in the T778 form.

The deduction must be claimed by the spouse/common-law partner with the lower income. You will not qualify for this deduction if one of the parents are not working, studying, or if they are receiving employment insurance (EI). EI qualifies as income only for single parents. The higher income partner can claim this amount if the lower-income partner is enrolled in school, sick, confined in prison, incapable of caring for the child due to infirmity or disability. You will need the receipt from your child care provider to be able to claim this amount.

Children’s Fitness Tax Credit and Art Amount

Only Quebec, Manitoba, and Yukon still have the fitness tax credits and the children’s art amount. All other provinces have eliminated these credits. Yukon children fitness tax credit which allows you to claim $1000 fees paid for children under 16 offers also a supplement of an additional $500 for children with disabilities. Yukon offers a claim of $500 fees paid for the children’s art amount for children under 16 who are enrolled in an art program and a supplement for an additional $500 for children with disabilities. Manitoba offers the same children’s art amount as Yukon but a different Manitoba fitness amount that covers $500 in fees paid for any family member.

Quebec residents can apply for a similar credit called Tax Credit for Children’s Activity. The credit allows you to apply for $500 in fees paid per child and another $500 per child who is suffering from infirmity or disability.

Registered Education Saving Plan (RESP)

Worried about your child’s future? You can start saving for your child’s education from day one. You enter a contract with a subscriber (Bank, Insurance companies, or any financial company) where you can name one or multiple children as beneficiaries of this plan. Canada Revenue Agency registers the education saving plan contract as an RESP. CRA has set the contribution limit and the grants they will provide for each child.

The RESP contributions are not deductible since you contribute the money after you pay taxes on your income. However, when the plan reaches maturity, it is considered the income of the child. The beneficiary (child or children), will be taxed on the increased portion not the original contribution amount from his parent. If the child decided not to go join a post-secondary education, the subscriber will attribute the money back to the contributor and any government grants has to be paid back to the government. Unless the child has a disability, you can transfer the fund to a  registered disability saving plan (RDSP). This option is available only for children with a certified disability form T2201 registered with CRA.

Transferred and Pooled Credits

In some cases, tax credits may have no effect on a taxpayer’s return, such as when they are already in refund status. In the case of families, many of these credits — all or the surplus portion — may be transferable to another family member, provided that this individual is either the child’s parent, or your spouse/common-law partner (and you are the child’s parent), or was the individual claiming an amount for the eligible child.  In a situation like this, the child care expenses most often must be claimed by the person with the lower net income; the only variable is if one of the situations listed in Part C or Part D of form T778 applies.

The tuition tax credit can be claimed or carried forward by the student or may be transferred to the student’s parent, grandparent or spouse, or student’s spouse’s parent or grandparent. For more details, go to this CRA link.

Medical expenses may be declared on family totals. To qualify, expenses must exceed the current level set by the CRA or 3 percent of net income, whichever amount is lower.  For more details, go to this CRA link.

Unlock your Credits and Deductions with TurboTax!

As a new parent, you may be worried you can’t do your taxes yourself. TurboTax has been helping Canadians get their taxes done right, and get their maximum refund for more than 20 years! We help guide you through your taxes step-by-step and automatically search through more than 400 credits and deductions to find all the ones that apply to you.

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With TurboTax Live Full Service, we can fully prepare and file your tax for you! Just upload your slips and receipts to your secure online account, we’ll prepare your return, review it with you then file it with the CRA – all without you having to leave the comfort of your home!