When you have (or adopt) your first child, you have to modify the way you file your taxes. To help offset the cost of raising children, the Canada Revenue Agency (CRA) offers a range of deductions and credits that allow you to optimize your income tax return.
Register for the Canada Child Benefit (CCB)
This is a tax-free payment that you might qualify to receive on a monthly basis for your children under the age of 18.
- To qualify for the CCB, you and your spouse/common-law partner must complete and file an annual tax return.
- The amount of the benefit is based on your income.
- CCB payments are determined based on your returns, and payments are made monthly from July (after-tax filing) to the following June.
These benefits are recalculated each year based on your information.
Register for the CRA My Account so you can manage and monitor your benefits.
Eligible Dependent Credit
If you are a single parent, you may qualify for the amount for an eligible dependent.
- To qualify, you must live with, and support, the child.
- You also must not live with a spouse or common-law partner, even if you have one.
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If you adopt a child under the age of 18, you may be eligible to claim an amount for adoption expenses.
These can only be claimed in the tax year in which the end of the adoption period occurred. As of tax year 2019, the maximum amount is $16,255.
Child Care Expenses
If you incur child care expenses while you are working, running a business, going to school, or participating in qualifying research, you may qualify to deduct the cost of your child care expenses on your income tax return for an eligible child.
- An eligible child for child care expenses is one who was under the age of 16 at some point during the tax year unless that child has a physical or mental impairment.
- The child must be dependent upon you, or your spouse/common-law partner, and have a net income equal to or less than $12,069 (as of tax year 2019).
Calculating your allowable tax-deductible amount for child care expenses
To calculate your allowable child care expenses deduction, use Form T778, Child Care Expenses Deduction. The allowable deduction amount is considered a tax deduction and will be transferred to line 21400 on your return.
Canada Workers Benefit (formally Working Income Tax Benefit)
This is a refundable tax credit for those that qualify, which provides tax relief for eligible low-income individuals/families that are working.
In addition to your annual income, to qualify, you must be a resident of Canada and 19 years of age, or older, in the tax year.
Disability Tax Credit
If your child has a severe mental or physical disability, you may qualify for the disability amount, the disability tax credit, and the child disability benefit.
To apply for the credit:
- Fill out part A of form T2201, Disability Tax Credit Certificate
- Have your child’s medical practitioner fill out part B.
If you qualify, you may write off an additional disability amount when claiming your child, and you may also claim the disability tax credit. Additionally, if you qualify for the Canada child tax benefit, you receive extra money with your monthly payment through the child disability benefit.
The CRA offers GST/HST tax credits to low-income families.
Like the Canada Child Benefit, in order to receive this credit, you and your spouse/common-law partner, must complete and file annual tax returns each year. You may still qualify if you are single and over 19, or if you are a single parent living with your child.
Once approved, payments are made quarterly, based on your annual tax information, and are re-evaluated each year based on your annual return.
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