|
|
Archived
Tax Columns
Click on the headline to view article.
|
Moncton Times & Transcript ~ Tax Help Plus ~ Child Care ~ March 6, 2007 - 06 May 2007 by TaxHelp
|
March Break.
Roger Haineault – “Tax Help Plus ...” – March 6, 2007.
So, are the kids in your house bored already? Let’s face it – you may have a house full of happy, smiling faces looking forward to lots of activity through this week, but unlike childhood, most adults aren’t fortunate to have an employer who says that we can take a mid-winter holiday. So how do we marry the expectations of the kids to do something unique with the practical reality of having to earn a living? If you’re one of the many working parents that use daycare, maybe there is a special camp that will welcome your son or daughter – and give you a tax break to boot!
First let’s review the rules as they apply to the 2006 tax return we are now completing. In order to claim, your child must have been born in 2000 or later in order to claim up to $7,000. For those born in 1990 to 1999, the maximum claim is $4,000. For those children who qualify for the disability credit, the maximum is increased to $10,000.
Most people recognize babysitting as a form of child care. If you are planning on deducting it, you will need the name of the individual to whom the payment is made and their social insurance number.
If your payment is to a daycare, you will need a receipt that shows the name of that organization. Less recognized but still a valid deduction are payments made to day camps like you may find now available for the next week. Also activities such as summer hockey schools, or even boarding schools can qualify. However, if the nature of the care is overnight, there is a further limitation of $175 per week for children under seven, $250 week for those who are disabled and $100 per week for any other eligible child.
Payments made to a parent are not deductible. Likewise, older siblings cannot be used unless they are 18 or over if you want to deduct the cost.
Child care is claimed on form T778. The allowable claim is the least of the actual amount paid, two-thirds of earned income or the combined limitations detailed above (it is a well recognized practice to detail all eligible children on the form in order to increase the per-child limit, whether any expenses were incurred for that child or not).
The parent with the lower net income makes the claim. In a two parent household where only one parent is working outside the home, the deduction is lost. There are exceptions to this rule. Two common examples where the higher net income does get to claim child care is when the other supporting person was attending school, or if they were institutionalized. In these cases there is a weekly dollar limit applied.
For those who are doing the caring, keep in mind that the receipt you provide generates taxable income to you. Ultimately this may lower any claim that a spouse may take on your behalf. The government is going to wonder if they check the parent taxpayer's return and review the receipts why you didn't report the income so be aware. Finally, you should know that the income you declare can usually be reduced by any costs you incur.
Check with your normal recreational associations for ideas that may appeal and enjoy the week!
Roger Haineault is with Tax Help Inc. His column "Tax Help Plus ..." appears each Tuesday. For questions, comments or column suggestions he can be reached by calling 855-HELP (4357) or by emailing roger@help4taxes.ca
|
|
|
|
|
