As you are getting ready to do your taxes this year, you may be wondering what the changes made just before Christmas will mean for you. (At least I am hoping you know that there are several changes that will affect Canadian families.)
I am hoping that you already know about the Family Tax Cut, the elimination of the end of year child tax credit amount, the enhancements of the Universal Child Care Benefit (UCCB) benefits, the increase in the children’s fitness tax credit, and how the child care expenses deduction has increased; but if not, here’s a little primer for you.
The Family Tax Cut
This is a limited form of income splitting. It is a federal tax credit that allows a high income earning spouse to transfer up to $50,000 of taxable income to spouse in a lower tax bracket. This gives these families some tax relief up to a maximum of $2,000. This is not a universal credit, you do have to have a child under 18 to take advantage of this program, and you cannot be separated or be confined to a prison or similar institution. You must also both file your taxes and neither spouse can be bankrupt.
The Elimination of the End of Year Child Tax Credit Amount
As of the end of the 2015 tax year, the amount for children under the age of 18 that you get simply for having minor children will be eliminated. Even with the child amount gone, most families will still see more money thanks to the enhanced UCCB benefits.
Enhanced UCCB Benefits
Effective January 1st, 2015, the Universal Child Care Benefit increased from $100 to $160 per month for kids under the age of 6 and there is now a new benefit of $60 per month for kids age 6 to 17. You may be wondering why you haven’t seen any cheques yet? There haven’t been any cheques so far. You will receive a retroactive payment in July, even though the enhancements have been in place since January.
Increase in Children’s Fitness Tax Credit
The government has doubled the children’s fitness tax credit for the 2014 tax year from $500 per child to $1000 per child. For the 2015 tax year and beyond, this will become a refundable tax credit.
Child Care Deduction Increased
Effective as of 2015 the maximum dollar amount that you can claim for your child care expenses have increased by $1,000. So that means if you have a child under 7 the new maximum deduction is now $8,000. If you have a child 7-16( or infirm child over 16) the maximum deduction. is now $5,000. The limit for disabled children is now $11,000.
Now if you are doing your own taxes with TurboTax they will help you through the changes. After all, the software walks you through everything asking you key questions along the way. So you really don’t need to worry about being up to date on knowing every single change as they have taken care of that for you. Another key feature of TurboTax is that if you need assistance, you can ask a question and get it answered in real time. They even double check everything so you can feel comfortable filing your return. While none of this will make taxes fun, hopefully using TurboTax and getting some more money back with the changes to the tax system will make it a little less painful.