Whether parents are newly going back to work for the first time since their child was born says Edmonton bookkeeping. Or if they have switched jobs, or purchased businesses. They end up with a multitude of questions. On what childcare expenses can be claimed. How much in expenses can they claim. And which parent should be claiming them.
To navigate this complex issue, parents should contact their Edmonton bookkeeping company. Will be able to answer their questions, and take their personal circumstances into consideration. In order to ensure that parents are not making mistakes on their income tax return.
One of the first questions that parents often have when discussing issues with their bookkeeper. Is it can anyone claim childcare expenses. And unfortunately, the answer to this question is no. In order for person to claim childcare expenses. They need that childcare in order to hold down a job, or run their business.
Although students who are attending a designated educational institute, such as a university or college. May also be eligible to claim childcare expenses. As well as those people who are doing research that is being funded by a grant.
Another question that parents often have, is if childcare expenses can be paid to anyone. Canada revenue agency requires that the person getting paid for the childcare must be a Canadian resident. Whether that is a babysitter, a daycare, a boarding school. Or even if it is a day camp or a summer camp.
However, regular schools cannot be considered childcare expenses. Whether it is for school fees, books or uniforms. Or even if they are additional expenses. Such as the expenses to fund field trips or sports teams.
One of the most important things for parents to keep in mind, if they are paying a babysitter as childcare expenses. Is that if Canada revenue agency audits the parents. They will be asking for the social insurance number of the person who is providing childcare.
Therefore, whoever is providing childcare expenses. Must ensure that they are claiming it as income on their own tax return. To avoid creating problems for them, if the parents get audited.
Another exception is that parents cannot pay childcare to immediate members of their family. For example, if a parent is getting their seventeen-year-old daughter to watch their new baby. That cannot be claimed as a childcare expense.
However, more distant relatives such as nieces and nephews, or aunts and uncles. Can be claimed as childcare expenses. And if audited, Canada revenue agency will also find out if they are relatives. When they ask those childcare providers their social insurance numbers.
This can be a lot of complex information. And parents who are either newly going back to work. And paying childcare costs for the first time. Or parents who are changing their childcare, they have many questions.
And hiring and Edmonton bookkeeping company can be one of the best ways they can ensure they do not make critical errors.
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The average Canadian typically wants to claim as many expenses on their income taxes possible says Edmonton bookkeeping. To minimize the amount of taxes that they have to pay at the end of the year.
According to industry Canada, the average Canadian citizen pays approximately 43% of their entire income in a variety of taxes. These taxes can include things like income tax, CPP and EI. But also include other taxes such as GST and fuel tax just name a few.
And while childcare expenses are claimable on a parents income tax return. There are many exceptions that they need to know about to avoid making errors.
Some of the first exceptions that parents should know about, is what age their child is that, can impact whether they can claim their childcare expenses or not. As well as how much in expenses they can claim.
For example, Edmonton bookkeeping says for a boarding school or summer camp. Parents will have a maximum amount that they can claim for each week.
Children under seven years of age, can get expenses up to two hundred dollars a week claimed for their childcare expenses. Children between the ages of seven and seventeen can incur one hundred and twenty-five dollars a week in childcare expenses.
And if parents have a disabled child. They can claim two hundred and seventy-five dollars per week for their disabled children under the ages of seventeen on their personal tax return. And if their disabled child is over seventeen, but still requires care. They can get one hundred and twenty-five dollars a week for childcare expenses a parent can claim.
However these amounts that a parent can claim for disabled child. Also depends on whether their child is eligible for disability payments or not. Making this a bit more of a complex issue that might first appear.
In addition to the limit for how much childcare expenses can be claimed per child. As well as based on the age of each child. There is also limit to how much a parent can claim total. Based on their own income.
The total amount that a parent can claim for childcare expenses. Must not exceed two thirds of their total income. And even if both parents are claiming childcare expenses. The amount claimed must not exceed two thirds of one parents income.
Because of the income that a parent earns. Factors into how much childcare expenses they are allowed to claim. Business owners need to be very aware of this. And let their accountant to know if they plan on claiming childcare expenses.
Reason why, is so that their accountant can ensure that they are taking the best mix of salary and dividends. That will allow them to claim the maximum amount of childcare expenses.
Because this is a complex issue, parents who have questions may best be helped. By hiring and Edmonton bookkeeping company to do their tax return on their behalf. So that they can avoid making critical errors. That might end up in an audit, or having to pay more in taxes at the end of the year.