Cash in with Your Kids this Tax Season – Deductions for Parents

Navigating the complexities of tax savings for families with children in Canada can be a daunting task. However, understanding the available benefits and deductions can significantly alleviate the financial burden of raising a family. Here are some essential tips and insights into maximizing your tax benefits as a parent in Canada.

Canada Child Benefit (CCB)

The Canada Child Benefit is a cornerstone of financial support for Canadian families. This tax-free monthly payment is designed to assist families with the cost of raising children under 18. The CCB replaced the former Canada Child Tax Benefit, offering a more streamlined and generous approach. The amount you receive is contingent on the number of children in your care and your family’s net income. Calculated every July based on your tax filings from the previous year, the CCB ensures that support is accurately aligned with your financial situation.

Eligibility hinges on living with the child and being primarily responsible for their care and upbringing. In cases of shared custody, each parent receives 50% of the full-custody benefit, adjusted for their individual family net income. It’s important to consult with a tax professional to navigate the complexities of shared custody arrangements.

For the 2023 tax year, the maximum benefit stands at $6,997 per child under six and $5,903 for children aged six to seventeen, annually. However, these amounts phase out gradually for families with an adjusted net income exceeding $32,797.

Child Care Expenses Deduction

Investing in child care is often necessary for parents to work, run a business, or pursue education. Fortunately, the Child Care Expenses Deduction allows families to claim a portion of these costs. The deduction limits are $8,000 per child under seven and $5,000 for children aged seven to sixteen. Eligible expenses encompass a wide range of child care services, including daycares, day camps, and certain boarding schools. Typically, the lower-income spouse claims this deduction, emphasizing the need for strategic tax planning within families.

Tuition Credits and Student Loan Interest

For families with post-secondary students, tuition credits offer a valuable opportunity to reduce taxable income. Canadian institutions issue a tax certificate (T2202A) detailing eligible fees paid within the tax year. Similarly, fees paid to certified foreign institutions may also qualify. Students must claim tuition fees on their tax return but can transfer up to $5,000 of the credit to a parent or guardian if they owe no tax themselves.

Additionally, interest paid on student loans can be claimed as a tax credit, providing further relief for families supporting their children’s education. This credit can be carried forward for up to five years, offering flexibility in tax planning.

Moving Expenses

Under certain conditions, moving expenses incurred to attend a post-secondary institution can be deductible. This provision supports students who must relocate to pursue their education, easing the financial strain on families.

Conclusion

At Shajani CPA, our team of dedicated accountants and advisors, including specialists in Calgary, Edmonton, and Red Deer, is ready to assist you with your personal tax filings. Our expertise in tax law and strategic planning ensures that families with children can navigate the tax system confidently, maximizing their benefits and deductions.

Remember, effective tax planning is key to optimizing your family’s financial health.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.