Tax Tips: Understanding Childcare Expenses

This article was provided by the Tax Professionals at H&R Block

Do you pay for childcare?
Read this article to understand more about childcare expenses taxes.

Parents spend thousands of dollars a year in childcare expenses, so being able to claim them on your taxes can mean a sizeable deduction. But like any deduction, there are rules and guidelines for what you can and can’t claim. Here are some of the most common considerations:

  • No receipt, no claim: Your childcare provider must give you a receipt for childcare expenses. Individuals who offer childcare must provide their Social Insurance Numbers (SINs) on the receipt. If your childcare provider refuses to provide a receipt, you cannot claim the expenses.
  • All in the family: If your mother or mother-in-law is caring for your children, you can claim the amount you pay her as childcare expenses. However, she also has to provide a receipt with her SIN and claim the money on her income tax. Remember, you can earn up to $10,527 federally in 2011 before you have to pay income taxes.
  • Minors don’t count: If you pay your 12-year-old child to look after brothers and sisters, this is not an eligible childcare expense.
  • Lower-income claims: The higher-income spouse can only claim childcare expenses in specific situations; for example, periods during which the lower-income spouse is in school, jail or in hospital. Otherwise, the childcare expenses have to be claimed by the lower-income spouse, and even when the entire amount cannot be used expenses cannot be transferred.
  • Maternity leave income: Childcare expenses can only be claimed against employment income and other earned income. And they have to be claimed by the lower income spouse. Maternity leave benefits are not considered earned income for the childcare claim, and generally someone on maternity leave will be the lower income earner.
  • Summer camps: You may claim only the childcare portion of this expense, so you should ask your provider for a detailed receipt.
  • Lunch-time supervision: If you pay to have your child stay at school to eat lunch, this supervision fee is considered an eligible childcare expense. However, you cannot include the cost of food.

The most important thing is to keep your receipts. Without receipts, you cannot claim any childcare expenses.

Would you like to try H&R Block’s online tax submission program this year? Feel free to enter to WIN a code from H&R Block!

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8 Responses to Tax Tips: Understanding Childcare Expenses

  1. NPC says:

    I always wondered about this! Thanks so much!! Especially the all in the family! My mama watches the kiddos!

  2. Christine says:

    Thank you so much for posting this!!! My parents watch Little One when I’m teaching.

  3. Shari G says:

    Such useful information!! Thanks!

  4. Katrina Brady says:

    Taxes can be frustrating but as you say…receipts receipts receipts. Keep everything!

  5. Callista says:

    I don’t need childcare but great tips, thanks!

  6. Leslie says:

    Very useful but it does leave out somethings like preschool and even if your income is below the allowable amount you still have to pay CPP on self-employed earnings, I just got dinged for that!

  7. I learned most of this awhile back; without receipts you’re out of luck. I actually didn’t know about the stay within the family rule, that’s good. I don’t need it anymore but it’s great for anyone under those circumstances.

  8. Childhood is the best time a kid can be directed and guided and it is the best age to learn. These fore parents try their best to give the kid what he or she needs, it all counts in to the expenses. This attempt is really helpful and a great hand.

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