The past year has brought family finances into the spotlight. Many Canadians lost their jobs, had reduced hours, or worked from home. Extended school and daycare closures forced some parents to take leave to care for their kids.
As a result, income tax filing may be more complex this year than submitting your T4 slip. It’s more important than ever to take advantage of benefits and tax credits available to Canadian families. Families can claim childcare fees, medical expenses and deduct amounts to care for dependent relatives.
File taxes on time to access family benefits
Filing your taxes on time is an important consideration. Canada Revenue Agency (CRA) uses your 2020 income tax filing to assess your eligibility to receive the Canada Child Benefit, or top up your Canada Education Savings Grant if you currently have a registered education savings plan for your child.
Here are some of the main benefits and claims for parents to keep in mind when filing their 2020 income tax return:
Canada Child Benefit (CCB)
This is a tax-free benefit for all Canadian families with children 17 and under. You don’t need to claim this benefit as income on your tax return. But to receive your benefit, you must file your taxes on time. If you don’t file your tax return by the April 30th
deadline, the government will stop paying benefits in July.
If your income was reduced in 2020, you might be eligible to receive a higher CCB, but you must file your taxes on time so CRA can assess you properly.
If you paid a nanny, babysitter, home daycare, daycare centre, or school before and aftercare fees so you could work or study in 2020, you can claim part of this amount. Some summer day camps and overnight camps where care is the primary function are also eligible. There are annual claim limits, depending on your child’s age.
Normally, the parent with the lower net income in your household claims childcare expenses, but there are exceptions
Keep in mind, if you had a babysitter or nanny, you must have their Social Insurance Number and make sure they claim the income legitimately based on receipts you have provided.
Canada Caregiver Credit (CCC)
If you or your spouse have a child with a physical or mental disability that lives with you, you can claim this non-refundable tax credit. If you share custody of the child, CRA has specific rules
around which parent claims the tax credit. You can only make one claim per child. In some cases, grandparents can make a claim on behalf of their grandchild.
Children’s activity credits
There is no federal sport or cultural tax credit. But Quebec, Manitoba and Yukon have provincial programs in place that allow parents to claim kids’ activities on their income tax return. In Quebec, parents can claim up to $500 per year for children’s activities like sports or art programs.
Manitoba and Yukon offer separate children’s fitness tax credits and children’s arts credits. In Yukon, parents of children with disabilities can claim additional fees.
Medical expense tax credit
This non-refundable tax credit covers a vast range of medical expenses that aren’t covered by your provincial healthcare or work insurance plans, including health insurance premiums. Eligible expenses include out-of-pocket doctor, hospital and lab fees, air filters, occupational therapy equipment, crutches, prescriptions and dental care. You must have receipts to back up your claims. Check out CRA’s full list of eligible medical expenses
Eligible dependent amount
This claim is designed for people who are financially responsible for the care of a relative. In some cases, single parents who have sole custody of a child can claim the child as an eligible dependent. Formerly known as the “Equivalent-to-Spouse” amount, you may be eligible if you have an aging parent or another dependent relative living with you and relying on you for care.
Your tax accountant can offer the best individualized advice on your eligible claims.
If you want to update your investor profile, discuss savings or get advice on debt, reach out to your SISIP advisor.
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by Financière SISIP Financial for the benefit of Financière SISIP Financial a trade name registered with FundEX Investments Inc., and does not necessarily reflect the opinion of FundEX. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.
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SISIP Financial, February 16, 2021