File A Tax Return For Your Teenager

Your teenager earns nothing so logically you do not need to file a tax return. Right? Not so fast.

We discussed in previous posts why the Registered Disability Savings Plan (RDSP) is the best way to save for your child’s future. The key element to the plan is the government grants and bonds (free money!) which is added to the account. The amount added is dependent on the family income.

If the beneficiary of the RDSP is over the age of 18, the “family net income” used to calculate the government grants/bonds is that of the beneficiary and his/her spouse. The income that will determine the grant and bond is based on the income tax return from the second preceding year. (Example: Contribution made in 2019 – net income based on the 2017 tax year.)

In other words, to ensure your child receives the maximum entitled grant and bond, file a tax return when he/she turns 17 (even though the income may be low or even non-existent) so that the grant and bond will be based on his/her low income status.

2 thoughts on “File A Tax Return For Your Teenager”

  1. Hi Milburn,

    I’m working with a volunteer income tax service in our city.

    Mine is very simple and my daughter is still my dependent; turning 18 this month.
    My daughter’s RDSP was opened last December (2018) and she has no other income.

    Where do we enter the RDSP amount on the form, since it is not truly income?

    Hope that’s clear enough information for my question,

    thanks,
    Helena

    1. I’m not sure which form you are talking about but if you have been filing tax returns for your daughter, the government knows what her income is and will contribute to the RDSP appropriately.

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