Raising a child on your own is a big job! Managing a family is a lot of work, so when it comes to your tax bill, there’s a few ways the Canada Revenue Agency (CRA) helps out with expenses. We know it takes a village, so we’re helping out with 9 tax tips that are sure to come in handy when you’re flying solo with kids.
1.Make sure your child is an eligible dependant before you claim them
Single parents are allowed to claim the amount for an eligible dependent (sometimes referred to as “equivalent to spouse”) for one of their children. To qualify for this, you have to support your child in a dwelling that you live in and maintain.
2.Claim your kids as dependants when you share custody
If there are two children and the parents share joint custody, then each parent can claim the equivalent for one of the children. But, if you pay child support, you can’t claim this credit.
3.Register for the Canada Child Benefit (CCB)
This benefit amount is a monthly payment, and is intended to help out with the costs of raising a child. It’s calculated by your household income level, so the amount you can receive depends on your earnings. In joint custody situations, the benefit can be split, and each parent gets 50% of what they would have received if they were the only caregiver.
4.Report what you pay or receive for child support
If your divorce or separation agreement is dated after May 1, 1997 then child support payments are neither taxable nor deductible, but you do need to report them on your tax return.
5.Claim your child’s activity expenses
No matter what your custody situation is, the Children’s Fitness Amount can be claimed by either parent, but can’t exceed $500 in total per child. There’s also a Children’s Arts Amount of up to $250 per child, but both of these credits will be eliminated by 2017. (this is no longer available)
6.Claim your childcare costs
Childcare expenses add up fast, but you can ease the pain by claiming them on your return. To do this right, you need to have receipts from your daycare or babysitter. If you happen to be paying a family member to look after your children, you can claim these costs too as long as they are 18 or over, and provide a receipt with their SIN. Just remind your helpful family member that they’ll also need to report this income on their tax return.
7.Keep the CRA in the loop if your living arrangements change
If you decide to move in with the other parent of your child, you’re considered common-law for tax purposes right away. If you move in with someone else, you’re only considered common-law after you’ve lived together for a year. If you get married or become common-law, you should report this change to the CRA using a RC65 Form. Changes to your marital status, including common-law changes, will probably affect your claim amounts as well as your eligibility for the Canada Child Benefit.
8.Claim your child as a dependant if they still need your help after 18
Most of the time, once your child turns 18, they’re no longer considered a dependent for tax purposes, even if you continue to support them. But there is an exception: if your child is 18 or older and is unwell or needs special attention, you can still claim them as a dependant. Whether you have one child or a house full of kids, single parenting is a balancing act. Using helpful tax credits and deductions is a small way to lighten the load.
9.Ask your child about their tuition or education credits
If your child is getting a post-secondary education, they might be able to provide you with unused tuition and educations credits if they can bring their tax bill to zero without them. They can transfer these credits to you even if they are older than 18.Whether you have one child or a house full of kids, single parenting is a balancing act. Using helpful tax credits and deductions is a small way to lighten the load.