Finances

Tax tips for you and your family

When you have a family, your financial situation changes and your income taxes do too. Here is everything you need to know before preparing your first tax return as a parent.

Yes, maternity leave income is taxable

Congratulations to the new parents! Amidst the bustle of breastfeeding, diaper changes and baby's daily care remember that you are still required to report your EI benefits as income. In most cases, Ottawa does not withhold enough from your payments for your taxes so you may be facing a bill at the end of the year. Several parents are surprised to owe money after maternity leave, so you’d better anticipate than end up with surprises.

We spoke with Johan Girard, higher tax specialist at H&R Block, and she suggests putting this money aside, if you can afford to, of course. You may end up with a little extra after your return, but at least you will be sure to have enough to pay your taxes at the end of the year.

Amount for dependent children

The spouse with the lowest income must claim childcare expenses to the Federal government. Moreover, one of the parents can claim the tax credit for children under 18 for the year 2014. Provincially, the portion of subsidized childcare costs cannot be claimed. However, if your children attend private unsubsidized daycare, or if they participated in summer camps, you may be entitled to a refundable tax credit based on your income.

Pool your receipts

Spouses and common-law partners can pool their receipts for charitable donations and medical expenses to maximize their tax savings.

According to Ms. Girard, for every $200 donation, you will receive a tax credit of 15%, and for every dollar above the initial $200 donation, you will receive a credit of 29%. In addition, you can wait up to five years and claim everything at the same time. Consider grouping the receipts of the whole family. You will enjoy a better credit. The same goes for medical expenses. "At the federal level, for example, it is advantageous to take all the receipts and use them in the income statement of the person with the lowest income since the costs will be reduced by 3% of your individual income. It doesn’t matter at the provincial level since they are reduced by 3% of your family income.”

You can also pool receipts for the credit for public transportation since parents can claim transit passes for children under 19.

Prepare your tax return even if you have no income

The calculation for benefits such as the Canada Child Tax Benefit (CCTB) and the GST / HST is based on your last income tax return and are paid only if you are reporting. Both parents must file a return to get the CCTB. In Quebec, the benefits for child assistance and solidarity tax credit are also calculated based on your tax returns. You don’t need to earn any income to be eligible for these benefits, but failing to file your income tax return results in unpaid benefits. Ms. Girard adds that governments occasionally revise tax benefits for families and create tax cuts or give benefits that you will only know about by filing an income tax return. Therefore, it is best to produce this annual statement to receive all the reimbursements that are available to you!

Single-parent families

According to Ms. Girard, "single-parent families are entitled to amounts for eligible dependents if they have been at any time of the year with a child under 18." Basically, the calculation for a child is similar to that of a spouse who would not have a salary. If your child works, the amount he earns is reduced. The federal basic amount for a child is $11,138 and can reach $13,196 if the dependent is entitled to the amount for family caregivers. After all the calculations, you could get about $1,395 tax cut if you are entitled to a credit for an eligible dependent.

In addition, parents are entitled to an amount of $2,255 for children under the age of eighteen years at the end of the year. This amount will be equivalent to $282.44 tax savings. It will be abolished in 2015, but you can claim it for 2014.


This week
Being a mother changes our life… and sex life!

You knew that having a baby would be life changing. You understood and accepted the fact that your sex life would slow down, but it’s been quiet for months and years now...

Celebrating your mother from afar

Mother's Day is coming! During this pandemic, many people won't be able to be with their mom's on this special day. Show her that you are thinking of her, always but especially today, with these ideas to celebrate your mom from a distance this Mother's Day!

7 Crafts for Mother's Day

Dear dad, dear babysitter, this post is for you! Mother's Day is fast approaching and to allow children to give a little sweetness to mom this year, here are 7 simple DIY craft ideas.

A Pink Menu for Mother's Day!

In spring, pink resurfaces. A color that evokes sunny days is suddenly everywhere, from the wardrobe to the lipsticks. To celebrate Mother's Day, you can even add a touch of pink to the menu!

Comments

Non