What Happens To Your Taxes When You Have Kids?
Having "mini-me's" is exciting, exhausting, frightening and rewarding all at the same time! There's a lot to learn (what does *that* type of crying mean?? And how on earth does something that small produce something like that in their diaper!?), including what the impact is on your family Candian tax return.
Child Care Expenses
Likely the largest impact will come from being able to deduct child care expenses on your return when you pay for childcare. These costs must be deducted by the spouse with the lower income, even if they have little or no income themselves.
In addition to daycare costs, you can also claim for camps (summer camps, pro-D day camps, etc.), though they are subject to a limit in terms of the dollar amount you can claim per week of camp. You should ensure that you keep the receipts for these costs, as this is one deduction the CRA will audit often and ask for the proof.
Canada Child Benefit
The Canada Child Benefit, paid to eligible families by the federal government monthly as a per child amount, is a tax-free payment. Therefore, it's not reported on your tax return.
If you are a single parent, you may also be able to claim a credit for one child as an eligible dependent.
If you have adopted, adoption expenses may also generate a tax credit.
The medical expenses that you pay for your children now also get included with any other medical expenses claimed for the family.
Fitness and Arts Credits
Unfortunately, the previous fitness and arts credits (created by claiming costs of kids' fitness and artistic programs) have now been eliminated federally, and practically all provinces have followed suit and canceled their own such credits for these things as well.
Hopefully, this helps you understand the main impacts on your taxes - good luck out there with your littles! If you're looking to make #lifelesstaxing, our Young Family Tax Package is a great option. We'll ensure all of these details are taken care of for you.