Tax time is fast approaching. If you’re looking to make the most of your budget, here are a few tax tips for single parents in Canada.
It can be tough raising a child all on your own, especially when it comes to finances. With rent, utilities, groceries, car payments, and expenses for your child, it can be a struggle to stay afloat. The Canadian Revenue agency recognizes that raising children can present some financial challenges and consequently they offer a few provisions to help out. Here’s a quick summary of commonly used tax tips for single parents in Canada.
In order to claim a child as a dependant (and receive benefits), make sure they are “eligible”. Single parents can claim the amount the CRA allows for one “eligible dependant”, sometimes referred to as “equivalent to a spouse”. Keep in mind, to qualify for this, you have to support your child in a home that you live in and maintain.
If you have two children and you share custody, then each parent can claim one child. But, if you pay child support, you aren’t eligible for this credit.
If you haven’t already, find out if you qualify for tax-free monthly benefits under the Canada Child Benefit (CCB). The CCB is a joint federal-provincial program, so benefits vary from province to province. The amount you receive declines with income over $43,000, until it’s phased out entirely at about $115,000. Keep in mind, what you get is calculated based on your previous tax return. If you don’t file a tax return the previous year, you won’t qualify! If you share custody, the benefit can be split and each parent gets half.
You can claim childcare expenses on your tax return, but you must have receipts from your daycare or babysitter. If a family member is taking care of your kids, you can claim these costs too, as long as a) they are over 18 and b) they are reporting the income on their tax return as well.
If your child attends college or university, they can provide you with any unused tuition and education credits if they can bring their tax bill to zero without them. They can transfer these tax credits to you even if they are over 18.
Beyond provisions like education credits, once your child turns 18, they’re no longer considered a dependant for tax purposes. Yes, even if you continue to support them. The exception is if you have a child 18+ who needs special attention. In this case, you can continue to claim them as an eligible dependant.