Child Care Expense Deduction
Allan Madan, CPA, CA
The Canada Revenue Agency (CRA) offers generous tax deductions for child care expenses incurred by parents. Are you eligible for this deduction? As an Accountant in Mississauga, I will help you answer this question.
Child Care Expenses –Defined
Child care expenses are costs that you pay to have someone look after your child, where your child is under the age of 16.
The following child care expenses are eligible for a tax deduction, pursuant to the CRA’s guidelines:
- Caregivers (e.g. babysitter) providing child care services
- Day care centres and nurseries
- The portion of the fees paid to educational institutions that relate to child care services
- Day camps and day sports schools
- Boarding schools
As an Accountant Mississauga, I recommend that you keep all of your receipts relating to child care costs, as the CRA will require proof.
Accountant Mississauga – Maximum Deduction Allowed
What happens if you spend a significant amount on child care expenses? How much is deductible?
The CRA has set the maximum amount for deductible child care expenses as follows:
• $7,000 for each child born in 2003 or later
• $4,000 for each child born in 1993 – 2002
The portion of child care expenses that is in excess of the limits specified above is non-deductible for tax purposes.
Lower Income Spouse
In a two-parent household, the lower income spouse must claim the child care expense deduction on his/her tax return even if the child care expenses were paid by the higher income spouse.
As an Accountant Mississauga, I have seen taxpayers ignore this rule in error, resulting in significant interest and penalties upon a tax audit. So please make sure that the lower income spouse claims the child care expense deduction.
Accountant Mississauga – Seek Tax Advice
You should seek the advice of an Accountant in Mississauga because the child care expense deduction can be complex. However, if you wish to prepare your own personal tax return and have incurred child care expenses, you should download the Child Care Expense Tax Form from the CRA Child Care Expense Deduction
To learn about the personal tax return preparation services offered by Madan Accountant Mississauga, please see Personal Tax Returns Mississauga
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
