Claiming Child Care Expenses

Child Care Expenses

Expenses related to child care can be deducted when filing taxes if they are incurred for earning income or pursuing education. This deduction effectively lowers your taxable income and thus, the amount of tax owed. To qualify for these deductions, each child must meet the criteria set by the Canada Revenue Agency (CRA):

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An eligible child is one of the following:

• A child of yours, your spouse's, or your common-law partner's.
• A dependent child with a net income below the Basic Personal Amount (approximately $12,000), who relied on you or your spouse/common-law partner for support.
• The child should be younger than 16 years at any point during the tax year, except for children with physical or mental impairments who are dependent on you or your spouse/common-law partner, for whom no age limit applies.

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Deduction Limits for Child Care Expenses:

• Up to $8,000 for each child under 7 years of age at year-end.
• $5,000 for each child aged 7 to 16 years.
• $11,000 for each disabled, dependent child of any age eligible for the disability tax credit.
• $5,000 for a disabled child over 16 years who does not qualify for the disability tax credit but depended on you for care.
• For children attending boarding school or overnight camp, the deduction is limited to $200 per week for children under 7, $275 for eligible disabled children, or $125 for children aged 7 to 16 years.

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Eligible Child Care Expenses:

These include payments made to daycare centers, nursery schools, caregivers like nannies, as well as boarding schools and camps providing lodging, day camps, and sports schools, provided their primary purpose is child care. When paying an individual, such as a nanny, their social insurance number must be provided, and receipts are required as proof of expenses.

If part of the tuition fees for private school is for child care services, this portion can be recognized as child care expenses. In certain cases, the fees paid to a private school could be seen as a donation, making them eligible for a charitable donations tax credit. There are two categories of schools that might issue receipts for charitable donations for all or part of their fees:

• Schools that focus solely on religious education.
• Schools that offer a combined program of academic and religious education.

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Non-Eligible Child Care Expenses:

Expenses not eligible for deduction include medical or hospital care, clothing, transportation, child care by the child's parent, spouse or common-law partner, payments to relatives under 18, tuition fees for educational institutions where no part of the tuition fees are for child care services, recreational program fees like swim lessons or Girl Scouts, and any child care expenses reimbursed by your employer.

To ensure eligibility and compliance with CRA requirements, it's advisable to obtain receipts for child care expenses, especially since the CRA conducts routine audits and may require proof of expenses.

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