I’ve often heard the phrase “children are priceless.” As a father, I now understand that to mean “children are incredibly expensive.”
I’m joking, of course. Kids are expensive, but they are absolutely worth it. I wouldn’t change my incredible job as “dad” for anything in the world. But I also make sure to take advantage of all the tax breaks that my little bundles of joy bring.
Lots of tax breaks for parents with young kids
For parents with young children, 2015 is shaping up to be a windfall year. There have been several tax breaks and child benefit changes this year aimed at Canadians with young families.
So if you are a lucky member of this group, here is a list of items that will likely boost your tax refund and the child benefits you receive this year.
1. Universal Child Care Benefit (UCCB):
The UCCB is increasing and expanding in 2015. The original benefit provided families with $100 a month for each child under the age of 6. The new rules expand that amount to $160 a month. Also, parents with children between the ages of 6 to 17 will receive a new benefit of $60 a month. The UCCB benefits are payable in July 2015, but retroactive to January 2015. That means eligible parents will receive a lump sum payment this July. The government estimates that the lump sum payment per child will be about $500.
2. Income splitting:
A new tax credit makes its debut this year. Called the Family Tax Cut credit, this new rule allows parents to save tax by transferring income from a “high tax-bracket” spouse to a “low tax-bracket” spouse. Assuming both spouses are in different tax brackets, the credit will ultimately lower the family’s tax bill, to a maximum of $2,000. The credit applies to married or common-law couples who have children under age 18. The Family Tax Cut is “a non-refundable tax credit” which means it reduces the amount of tax you owe, but it does not create a tax refund.
3. Children’s fitness amount:
Soccer moms and hockey dads can enjoy watching their kid’s games a little more this year. The Children’s Fitness Amount has been increased to $1,000 (up from $500 last year). That means the fees paid for your child to participate in a prescribed physical activity program are tax deductible, up to the $1,000 limit. Again, this credit is a non-refundable tax credit.
4. Adoption expenses:
Adopting parents have a larger tax break this year. Parents who are adopting, or have adopted, a child under the age of 18 are able to claim up to $15,000 of adoption expenses (up from $11,774 last year). Eligible expenses include court, legal and administrative expenses, reasonable travel and living expenses, and fees paid to licensed adoption agencies. An added bonus: the $15,000 limit can be split between you and your spouse or common-law partner, which can make sense if you are both in a high tax bracket.
There is certainly a bias toward young families this tax season. However, great money tips are coming soon for all you cool singles out there. Keep an eye out!
