Father And Daughter by Vera Kratochvil
Parenting – rewarding, fulfilling, challenging, exhausting and expensive. And for single parents, it can be all of those and then some. Fortunately, there are tax benefits, specifically for single parents that may help with your 2012 tax return. Cleo Hamel, senior tax analyst with H&R Block, provides the following tips for those Canadians raising children on their own:
Child Tax Amount: In primary custody situations, you are the only parent allowed to claim the child tax amount. For joint custody, then you have to agree which parent will claim this credit. If you can’t agree then no one will be able to claim it.
Eligible dependants: Single parents are allowed to claim $10,822 for the amount for an eligible dependant (sometimes referred to as equivalent to spouse) for one of their children as well as the $2,191 child amount. You have to support your child born in 1995 or later in a dwelling which you live in and maintain.
Child Tax Benefit: This benefit is calculated by your household income level so the amount you receive depends on your earnings. The rates and amounts vary by province but in general, if you earn more than $42,707, the CTB amount will decrease until it goes to zero at around $112,957. There is also a supplement for lower-income families earning between $24,863 and $42,707. In joint custody situations, the benefit is split.
Child Support: If your agreement is dated after May 1, 1997 then child support payments are neither taxable nor deductible although you do need to report them on your tax return.
Joint custody: If there are two children and the parents share joint custody, then each parent can claim the equivalent to spouse amount for one child. The credit cannot be split if there is only one child. But if you pay child support, you cannot claim this credit.
Child Activities: The Children’s Fitness Amount can be claimed by either parent but cannot exceed $500 in total per child. There is also a Children’s Arts Amount of up to $500 per child.
Changing status: If you move in with the other parent of your child, you are considered common-law for tax purposes straight away. If you move in with someone else, you are only considered common-law after you have lived together for a year. If you get married or become common-law, you need to report the change to the Canada Revenue Agency using a RC65 Form. This will affect your ability to claim the equivalent to spouse amount as well as your Child Tax Benefit calculation.
Universal Child Care Benefit: For any children under 6, you will receive $100 per month under the Universal Child Care Benefit program but it is considered income. If you are single, the government now allows you to report this as income for one of your children.
Childcare: Childcare expenses can add up but you must have receipts from your daycare or babysitter. If you are paying a family member to look after your children, this can be claimed as long as they are 18 or over and provide a receipt with their SIN. They will also need to report this income on their tax return.
Claiming dependants: Once a child turns 18, they are no longer considered a dependant for tax purposes even if you continue to support them. The only exception is infirm children.
If you are a single parent looking to claim all your benefits, you can use tax preparation software, like H&R Block At Home, that provides a safe, reliable and stress-free option and ensure you get your maximum refund.
Information provided by H&R Block.
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