This is the first blog in a series of articles concerning potential tax savings opportunities for you and your family. This week, we focus on children!
For taxpayers, the loss of the Child Tax Benefit on the 2015 income tax return is one that will be sorely missed by many. Worth almost $350 in credits per child, its removal has left many wondering how they will be able to avoid paying the tax man this upcoming season. Fortunately, there are still many tax-saving opportunities available-and some can still be used now!
Children Activity Credit
The Children’s Activity credit is offered at both the federal and provincial levels. Federally, you can claim up to $1,000 in fees for each child’s participation in an eligible program that is geared towards fitness and physical activity. You can also claim up to an additional $500 per child for an eligible arts related program. In Ontario, you can claim up to an additional $560 per child for their participation in an eligible activity program centered on either arts or fitness.
Family Tax Cut
The Family Tax Cut is a credit designed to allow families with disparate incomes to claim additional tax credits as though they were splitting their income. For example, a two-income family who both earned $35,000 are taxed at a marginal tax rate of 15% (a total of $10,500 in federal taxes before credits), while a family with two disparate incomes of $10,000 and $60,000 are taxed at 15% and 20.5% (for a total of $13,800 in federal taxes before credits). The FTC creates additional credits that emulate the tax savings that would occur if up to $50,000 of the higher earning spouse’s income were to be transferred. Please note: only families with children and two incomes are eligible for the FTC.
Adoption expenses accrued throughout the adoption period (beginning with the application for adoption and ending with the awarding of an adoption decree or when they take up permanent residence with you) can be claimed for each child up to a maximum of $15,255. These include fees paid to an agency, legal fees, travel expenses and other mandatory payments required for the adoption. Public transit expenses can be claimed when they permit unlimited travel for at least 5 consecutive days (in the case of short-term passes) or the card is issued by a public transit authority and is used for a minimum of 32 one-way trips within a one-month period (in the case of electronic passes such as the Presto pass).