Yahoo Finance Taxes 2024: These are some of the benefits parents may be missing
Raising a child is a rewarding – and expensive – endeavour. That makes tax season all the more important for parents, and experts say there are several benefits and credits they should be aware of ahead of the April 30 deadline.
Ameer Abdulla, a partner specializing in tax at EY Canada, said the benefits most relevant for parents will depend on how old their children are, and how close they are to key milestones, such as no longer needing childcare or pursuing post-secondary education.
“Children are not the license to write off things like they may have been in the past," Abdulla said in an interview with Yahoo Finance Canada. "But certainly, there are still some benefits for parents with children at each stage of their growth."
The major benefits you don’t want to miss
First, there’s the Canada Child Benefit (CCB), a tax-free monthly payment that’s administered by the Canada Revenue Agency (CRA) to eligible parents in order to help them with the cost of raising children. The maximum benefit for children under six is $7,437 annually ($619.75 per month), and $6,275 annually ($522.91 per month) for each child between the ages of six and 17.
“Don’t forget to sign up and apply for it, because there’s no retroactive payment. It only starts when you’ve signed up,” Abdulla said.
Read more about applying for the Canada Child Benefit here
CCB payments will stop if you don’t file your tax return, so make sure you file your returns each year.
Then there’s childcare. While childcare costs in Canada have declined over the last three years, with average amounts for full-time care falling to $544 per month in 2023 according to Statistics Canada, it is often one of the biggest expenses parents face in raising kids. Statistics Canada said that in 2023 more than half (56 per cent) of children five years old and under were in licensed or unlicensed child care in Canada. Of those who were not using child care, 26 per cent said their child was on a waitlist, up from 19 per cent in 2022.
Fortunately, parents are able to claim some childcare expenses on their annual tax return.
“The general amount is $8,000 for children under seven, and $5,000 per child from seven to 16,” Abdulla said, adding that there are additional amounts available for children with disabilities.
Can I get a tax credit for my child's summer camp?
As children get older, many parents sign their kids up for camps in the summer.
“As long as the goal of the camp is to care for the children then yes, you can claim it as childcare expenses,” Stefanie Ricchio, a tax expert at TurboTax Canada said in an interview.
“If it’s a hockey (camp) with drills specifically focused on skills development, then no… If it’s a daycare under a theme – art, science or whatever – that is okay.”
Abdulla notes that it is a spectrum in terms of which camps qualify and which ones don’t. The CRA says that a degree of childcare is normally involved in all camp programs, so the factors determining whether it involves “a sufficient degree of child care” includes the children's age, instructors’ qualifications, the extent that progress is measured and goal-orientation is involved, time devoted to the program, the duration of the program and the training and educational facilities used.
“So, typically where the day camp is for young children and the program is enriched by sporting activities and/or instruction, that would qualify for the childcare credit,” Abdulla said via email.
“Where the program is for older children, the instructors have certifications/qualifications, students’ progress is monitored and goal-oriented and the facilities are sophisticated, then that would likely be an educational or training camp and not childcare.”
Abdulla said camps should be evaluated against the CRA’s indicators to determine whether they are eligible for a child care credit.
Read the CRA's guidelines for the Child Care Expense Deduction here
And while the federal fitness and arts credit was eliminated in 2017, there are still some provinces that have a children’s fitness tax credit. If you’re a resident in Newfoundland and Labrador, Quebec, Manitoba or the Yukon, you can claim your child’s fitness activities on your taxes.
Deductions that some parents may be missing
Ricchio says a frequent question she receives from parents is about tax credits for children with disabilities.
“Twenty-nine per cent of the Canadian population has a disability. When you think of it from that perspective, it’s definitely something we should be talking about more,” Ricchio said.
Ricchio says Canadians can now apply for disability tax credits online via their CRA account, a process that started this year. A major credit is the child disability benefit, a tax-free benefit for families of a child under 18 who is eligible for a disability tax credit. The benefit is paid monthly along with the CCB.
Read more about applying for the Child Disability Benefit here
Ricchio also said many parents do not realize they can claim medical expenses for their children.
“If your doctor says your child would benefit from tutoring, for example, that’s an eligible medical expense that you can claim on your tax return,” she said.
“These are things that I think a lot of parents are not recognizing.”
Abdulla says there are also tax credits available for adoption expenses and in-vitro fertilization.
Adoptive parents can claim up to $18,210 in expenses incurred through the adoption period, including fees paid to adoption agencies, court costs, document translation fees and any other reasonable expenses related to the adoption required by a provincial or territorial government or adoption agency. Under the Medical Expenses Tax credit (METC), Canadians can also receive credit for medical expenses that were paid for the purpose of conceiving a child.
“For very new parents, keep those in mind as you land on your feet,” he said.
“Those benefits are the ones that often get forgotten or missed and there is actually support for folks who proceed down that path to start a family.”
RESPs: start them as early as possible
While parents can’t deduct contributions to Registered Education Savings Plans (RESPs) from their taxes, it’s still something parents should start contributing to as soon as possible, says Ricchio.
Under the RESP program, the government will match your contributions by 20 per cent, to a maximum of $500 per year per child. In order to maximize the grant program, parents would have to contribute $2,5000 annually towards an RESP.
“You should start contributing immediately,” Ricchio said.
Read more about starting a Registered Education Savings Plan here
“If it’s possible, contribute as soon as possible, so that you can take advantage of the grants that are paid up until the age of 18. And if you are invested in a decent product, you’ll be able to watch as your investment balance grows over time.”
Once kids are off to pursue a post-secondary education, there are tuition tax credits available for students. If the students’ income is below $50,000, they won’t be able to claim the credit, but can transfer it to their parents.
Get your kids to do their own taxes
As your children get older and into their teenage years, Ricchio recommends getting your kids who have part-time jobs to file their own taxes.
“My 16-year old just completed her taxes for the first time herself,” she said.
“If you can yourself get comfortable with the income tax process and transfer that (knowledge) over to your kids when they are around the age of maybe 15 or 16, when they have their first job… it’s all about building the habit.”
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
Download the Yahoo Finance app, available for Apple and Android.
