Today we will have a look at Child Care Expenses and why you should be claiming them. Firstly, let’s review the basics of such a claim.
- Expenses for child care may be claimed if both spouses work, go to school or carry out research
- Up to $10,000 may be claimed if your child is eligible for the Disability Amount
If you hire someone to care for your child even in the context of ABA therapy or tutoring, you should adjust the invoice and receipts to reflect child care until you reach the $10,000 limit.
Child care expenses are a tax deduction and not a tax credit. That means for every dollar you spend on child care it will reduce your taxes owing by your marginal rate. For the highest tax bracket, this means you will get a tax savings of $0.43 for every dollar claimed. This is significantly more than the maximum 20% that you would receive for a medical expense claim. Refer to TaxTips.ca for your personal combined Federal and Provincial tax rates.
Hire a relative aged 18 or older (or other person of any age) and claim these costs as a child care expense. Note that you must have proper invoices and receipts including the person’s SIN number.
Other eligible care child expenses include
- caregivers providing child care services;
- day nursery schools and daycare centres;
- educational institutions, for the part of the fees that relate to child care services;
- day camps and day sports schools where the primary goal of the camp is to care for children
- boarding schools, overnight sports schools, or camps where lodging is involved (other than education costs)
Refer to my page Child Care Expenses for more detail.
Next time: Attendant Care Expenses