Tax filing season is here again. Jack knows that tax deductions and exemptions reduce the amount of income on which he has to pay tax, in contrast to a tax credit which means a dollar-for-dollar reduction in the actual amount of the tax that he has to pay. Although Jack pays child support for the two children, he cannot deduct the amount from his income. However, the monthly spousal support he pays Jill is a deductible amount. Jack knows that he will owe the Taxman money again this year and as a good Canadian citizen he will pay his dues. However, he is also looking at ways to keep money in his pockets as he would love to buy a pontoon boat which would make his summer vacation with the children so much fun.
Here is a list of some child tax benefits and credits that might be available to you from the federal and Ontario governments:
1. Child Tax Credits - This federal credit can save you up to $329 for each child under the age of 18.
2. Canada Child Tax Benefits - The federal CCTB is calculated for July to June yearly and could bring in to a low-income family with two children up to $555 in additional savings. If Jill and Jack shared custody of the children (50-50 or 70-30), the CCTB would be divided equally but since both kids reside with Jill (70-30), she is the only parent eligible to claim the CCTB. In Ontario, depending on your income, you may also be eligible to claim the Child Care Benefit and the Child Care Supplement.
3. GST Credit: This federal tax-free quarterly payment helps individuals and families with modest income offset all or part of the GST that they pay. To receive the GST credit you have to apply for it every year.
4. Child Fitness and Art Tax Credit – At the federal level, for each child under 16, parents may claim a tax credit of up to $500 registered in a sport like ballet, hockey and soccer and another $500 for artistic and cultural activities, like art or music lessons. In addition, the Ontario government offers the Children’s Activity Tax Credit where you can claim up to $526 in eligible expenses and get up to $52.60 back for each child under 16. You can receive up to $105.20 back for a child with a disability who is under 18.
5. Universal Child Care Benefit – The federal UCCB provides families with $100 per month for each child under the age of 6 or $1,200 per child, per year.
6. Eligible Dependant – If you were a single parent during 2012, you may be able to claim an eligible federal dependent tax credit for one of your children which is equivalent to claiming a dependent spouse. However, whether or not you receive spousal support you are entitled to this credit. In the case of Jack, since both kids reside with Jill, he may not claim them.
7. Child Care Education – Child care expense can be claimed to the federal government when you hire a babysitter or put your child in a daycare or summer camp to enable you to go to work (or attend school). If you enrolled your child in a fitness program or summer camp, which operates during the hours you are working, then you must first claim the cost as a childcare expense.
8. Medical Expenses – Save your receipts whenever you buy glasses for your children or take them to the dentist as you may claim them at the federal level. If you have a group health insurance plan at work, then only the portion that is not reimbursed is available for you to claim.
9. Child Disability Benefit - The federal and provincial governments provide child disability benefits. If you believe your child is eligible for this benefit, ask your doctor or occupational therapist to complete a Disability Tax Credit form.
10. Tuition Tax Credit - The federal government offers textbook amount and scholarship and bursary exemptions. Also, if your child attends a university or a private school, you may claim the applicable tax credits from the Ontario government.
Find out more information about Tax Benefits and Credits by visiting the section in our ToolBox (click here).
