Had a baby? Here’s 5 ways to make your taxes easier
Congrats! Your little bundle of joy has arrived. Life is suddenly full of tiny socks, little toques and sleepless nights. A new baby can be a little bit chaotic, and though your taxes might not be top of mind, there are a few things you can do now to help make sure things go smoothly down the road.
Here are 5 things you can do to ace your parenting tax game up front:
Let the Canada Revenue Agency (CRA) know you’ve had a baby
Most hospitals provide the paperwork to register your baby with the CRA. Why does a newborn need to be registered? They just got here! Registering your baby triggers the Canada Child Benefit (CCB), which is in place to help cover the costs of raising a child. The Canada Child Benefit is based on income, and will also require that you complete a tax return.
Get your child a social insurance number (SIN)
We know you won’t be sending your little one off to work any time soon, but it’s still important to apply for a SIN as soon as your child is born. You’ll need it to open a Registered Education Savings Plan (RESP).
Open an RESP
RESPs are a great way for you to save for your child’s education, and the government saves along with you. Parents can contribute up to $50,000 over their lifetime, and when your child is ready to pursue post-secondary, they can use these funds. Your child will claim their RESP income amounts as a student, when they’re less likely to be working full-time. The Canada Education Savings Grant (CESG) is used by the Canadian Government to match your funds, up to a max of $500 per year. Taxpayers with income less than $83,088 will also receive a supplement.
See if you’re eligible for the Canada Learning Bond (CLB)
To help lower income families, the Government provides $500 in a CLB at birth for children whose families are entitled to the National Child Benefit Supplement. As long as your family is still entitled to the supplement, your child will receive an additional $100 CLB each year until the age of 15.
Use public transit
Not only is taking transit good for the environment, it’s also good for your wallet. Taxpayers who use public transit can claim a non-refundable tax credit for their passes, and it includes passes for dependant children under the age of 19. The passes need to last at least one month, or you can claim weekly passes purchased over a period of four consecutive weeks. If your town uses fancy electronic payment cards, those will qualify too.
Life with a baby means lots of change, but the CRA has a few ways of helping new parents. From the CCB, RESPs and childcare deductions, stay in the know and make sure you’re making the most of your new tax situation.