Having a child can be expensive. Luckily, the Canada Revenue Agency (CRA) recognizes the costs involved and offers families a range of credits and deductions.
Birth-Related Medical Expenses
All Canadian taxpayers can claim medical expenses that exceed the lesser of either $2,208 or three percent of your net income. If you have medical expenses for yourself, your spouse or common-law partner, your child, or the child of your spouse or common-law partner, total all expenses and subtract the lesser of the two values quoted above. Then, multiply that amount by 15 percent. The result is used as a credit against your taxes owed, and of course, you may include birth-related medical expenses.
Eligible Dependant Amount
If you are a single parent, you may be able to claim the amount for an eligible dependent on line 305. To calculate how much you may claim, use Schedule 5, Amounts for Spouse or Common-Law Partner and Dependants. Then, transfer that amount to line 305. The maximum claim for this credit as of 2015 is $11,327.
Child Care Expenses Deduction
If you incur child care expenses so that you can work, run a business, go to school or do qualifying research, you may claim a child care expenses deduction. If your child is under seven, you may claim up to $8,000, and for child between seven and 15, you may claim $5,000. If your child qualifies for the disability tax credit, you may deduct up to $11,000.
To claim this deduction, keep all of your receipts form your child care provider, and use Form T778, Child Care Expenses Deduction, to help you calculate the amount of your deduction. Transfer the amount from that form to line 214 of your tax return.
Family Tax Cut
First applicable in the 2015 tax year, the CRA introduced the Family Tax Credit in 2014. The FTC allows qualifying families to claim a tax credit up to $2,000. This credit only applies in situations where if the higher-earning spouse were allowed to transfer up to $50,000 of income to the other spouse or common-law partner, they would pay less tax as a result. Both single and dual-income families may apply for this credit. The FTC is not available for tax years 2016 and beyond.
Children’s Fitness Amount
If you enroll your new baby in infant swimming lessons or some other type of fitness program, you may be able to claim the children’s fitness amount. To claim this amount, calculate the total amount of fees paid to qualifying fitness programs up to $1,000 and enter that amount on line 365 of schedule 1. Add an additional $500 if your child receives the Disability Tax Credit. This credit is not available for tax years 2017 and beyond. Learn more here.