![]() Taking all of these figures into account, the computation of a deduction for child care expenses for a typical Canadian family would look like this.Ī two-income family has two children and both parents are employed. $275 per week for a child who was born in 2018 or earlier, for whom the disability amount can be claimed.$200 per week for a child who was born in 2012 or later and.$125 per week for a child who was born from 2002 to 2011. ![]() Similar restrictions are placed on the amount of costs which can be deducted for overnight camp or boarding school fees, and those are as follows: $11,000 in costs per year for a child who was born in 2018 or earlier, for whom the disability amount can be claimed.$8,000 in costs per year for a child who was born in 2012 or later.$5,000 in costs per year for a child who was born from 2002 to 2011.As well, where expenses are incurred for overnight camps or boarding schools, the amount deductible for such costs is similarly capped.įor 2018, the following overall limits apply: Basically, the rules governing the deduction of child care expenses impose a maximum deduction per child per year (referred to as the “basic limit”), with that basic limit dependent on the age and health of the particular child. The third figure to be determined is the one which requires some calculation. As well, where a claim is made for a deduction for child care expenses on the annual return, the claimant must obtain (and be prepared to provide to the tax authorities) the social insurance number of the individual providing the care as well as a receipt showing the amounts paid, whether to an individual or an organization. So, it’s not possible for a working spouse to pay the stay-at-home parent to provide child care, nor is it possible to pay an older sibling who is under the age of 18 to provide such services, and to claim a deduction for those expenses incurred. Specifically, no deduction is available for amounts paid to most family members to provide child care. While virtually any licensed child care arrangement will qualify, more informal arrangements may not. The second figure to be determined is the amount actually paid for eligible child care costs during the year. Where the family incurring child care expenses is a two-income family, and both spouses are working, the claim is made by the spouse with the lower net income, and consequently his or her net income is used to determine the two-thirds of income figure. The income figure used to calculate the two-thirds figure is, generally, the amount shown on Line 150 of the annual tax return. The steps involved in doing so are as follows.įirst, the amount of any deduction for child care expenses is limited to two-thirds of the taxpayer’s “earned income” for the year. However, at the end of the day, the amount of child care expenses which can be deducted is the least of three numbers, and only one of those numbers requires a calculation. The calculation process set out on Form T778, which is used to determine the amount of any allowable deduction from income for child care expenses incurred can seem quite complex. That deduction, which is not specific to summer child care costs but is available for such costs incurred year-round, allows parents who must incur child care costs in order to work (whether in employment or self-employment) or, in some cases to attend school, to deduct those costs from income, within specified limits. This year, any offset provided by the tax system with respect to summer child care costs can only be claimed through the general deduction provided for child care costs. The bad news is that some of the deductions or credits which could be claimed in recent years are no longer available. And, since eligible expenditures can be deducted from income on a dollar-for-dollar basis, that means that income used to pay eligible child care expenses is effectively not subject to income tax. The good news for families which must incur such expenditures is that in many cases a deduction for all or part of the costs incurred can be claimed on the tax return for the year. Some options, like day camps provided by the local recreation authority or municipality can be relatively inexpensive, while the cost of others, like summer-long residential camps or elite level sports or arts camps, can run to the thousands of dollars. There are many such options available to parents, but what each of those options have in common is a price tag – sometimes a steep one. Summer is approaching us! For many families, it means the need to begin researching the availability of suitable child care or summer daytime or overnight camp arrangements for the summer months.
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