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Tax matters

Tax filing tips to relieve the financial cost of parenthood Add to ...

Tim Cestnick is president of WaterStreet Family Offices, and author of several tax and personal finance books. tcestnick@waterstreet.ca

If there’s one thing I understand all too well, it’s the cost of having kids. Last weekend, our daughter approached my wife with a request: “ Mom, can I have $50?”

“Fifty dollars?” Carolyn replied. “What do you think I am? Made of money or something?” Evidently, “Mom” is simply an acronym for “made of money.”

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Still, my kids know that I’m more of a pushover than Carolyn when it comes to asking for money. In our home, “Dad” stands for “definitely ask daily.”

We all know it’s going to be expensive raising kids, so you might as well get as much “kid-related” tax relief as you can. When filing your tax return this year, don’t forget these credits and deductions:

Child tax credit: You’re entitled to claim a federal tax credit of $2,234 (for 2013) for each child who was under age 18 in 2013. This will save you about $335 in federal tax. Many provinces have additional amounts available that can add to the tax savings.

Fitness tax credit: You can claim up to $500 annually in fees for sports or fitness activities for your children under age 16. The program must be weekly and last at least eight weeks. If it’s a day camp, it must run for five consecutive days. You may be entitled to an additional $500 for children up to 18 with a disability.

Arts tax credit: Claim up to $500 annually in fees for eligible arts, cultural, recreational or development activities. These can include academic tutoring, language lessons, or literary, visual, or performing arts, music lessons, etc. The program must be for eight weeks or longer, or five days if a day camp.

Child care deduction: Generally, the lower-income spouse is entitled to claim a deduction for child-care costs incurred, up to $7,000 for children under seven and $4,000 for kids seven and over but under 16 in 2013. Special rules apply for children with disabilities. It’s generally possible to pay your child 18 or over to look after those under 16. It’s a great way to split income.

Adoption expenses: If you adopt a child under age 18 you can claim a tax credit for up to $11,669 of those costs (for 2013). This will save you up to $1,750 in federal taxes. For 2014, the limit for expenses will be increased to $15,000 and indexed annually thereafter.

Universal child care benefit: Every family is entitled to receive $100 each month for each child under age six. This is true regardless of your income. The payments are taxable. Apply online at http://www.cra-arc.gc.ca/bnfts/uccb-puge/menu-eng.html.

Canada child tax benefit: You may be entitled to the CCTB, which is a monthly tax-free payment for each child under age 18. The amount of the benefit depends on your family income, province of residence and number of kids. The rate is adjusted on July 1 each year. If you file your tax return late your benefits might be delayed since the benefit is based on your reported income. Low-income families may be entitled to a national child benefit supplement, and if your child has a disability you may be eligible for the Canada disability benefit as well. To figure out your total benefits, check out the online calculator at http://www.cra-arc.gc.ca/bnfts/clcltr/menu-eng.html.

Tuition, education and textbook credits: If your child is enrolled full- or part-time in a qualifying postsecondary program, he or she can claim a credit for their tuition fees. In addition, full-time students can claim $400 per month of enrolment, plus $65 per month for textbooks. Part-time students can claim, in addition to tuition, $120 each month of enrolment and $20 per month for textbooks. Any credits that your child is unable to claim (due to insufficient income) can be transferred to a parent, grandparent, spouse or common-law partner up to a maximum of $5,000. Or, your child can carry those amounts forward to use in a future year.

Student loan interest: If your child has a qualifying student loan he/she may be able to claim a credit for the interest paid on that loan in 2013. Unused credits can be carried forward by your child and claimed in the next five years.

Transit pass costs: The cost of transit passes for your children age 19 or under in 2013 can be claimed by either parent (including common-law partners). The usual conditions for claiming transit passes apply here.

Moving expenses: If your child moved to attend postsecondary school, he or she may be able to claim moving expenses. The usual conditions for moving expenses will apply.

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