Kids and Taxes
It's halfway through the school summer break and a good time to remind you of all the items related to your children you need to keep for the 2014 taxes that will be completed next Spring.
Are your kids enrolled in Summer camp? Make sure to keep the receipts. They may be used for child care expenses or the fitness or arts credits.
When the students start school again in the fall, if you pay for a "lunch program" (pay for supervision during the lunch hour), that is considered child care expenses, so keep the receipts!
Of course day care (institutional or private) is considered child care and can be claimed by the spouse with the lower income. Make sure you keep your receipts. If you use private daycare, be sure the full name of the provider is clear and the SIN is also included on the receipt.
What will your children enrol in this fall? Fitness activities: hockey, curling, gymnastics, dance, etc? Arts activities: scouts, tutoring, music lessons, arts activities, etc? Be sure to keep the receipts for any activity your child is involved in. Likely it can be used as a tax credit. And were they enrolled in something this past Spring or Summer? Dig out or get copies of those receipts and add it to your "tax folder or envelope or accordion file".
Remember all the medical expenses you may have paid for too: dental, prescriptions, eye exams and eyewear, medical travel (more than 40km one way), orthodontists, laser eye surgery. All the family's medical expenses can be claimed on one parent's tax return, including premiums paid for a plan either privately or through your employment deductions.
There are some expenses I get asked about every year that are not claimable on taxes: fees paid to a private school (only post secondary schooling can be claimed, with an official tax receipt: T2202); travelling back and forth by car or bus; parking; books etc.
Are your teenagers working? Make sure if they are under 18 that they do not have CPP deducted from their pay (although they will get it back when they file a tax return). And if there is any tax deducted or EI deducted, you may want to have a tax return filed for them as they may get some or all of it back depending on their income. Should the teenager file anyway? I recommend it because then they start creating some RRSP contribution room.
If the teenager will be 19 before April 2016, then they should file the 2014 tax return next Spring, regardless of income.
If your teenager is working in the hospitality industry, remember they should be claiming the tips. This is from Canada Revenue Agency's website: "Income such as tips, gratuities, or occasional earnings may or may not be shown on your T4 slips. If they are not included on your T4 slips, report them. It is your responsibility to keep track of the earnings you receive through your employment."
There was a recent blitz conducted by CRA in an Ontario community focusing on an unfortunate group of servers and exposed very surprising amounts of unreported tips and gratuities. CRA found millions of dollars of unreported income and collected lots of taxes. CRA has not said if it will expand this pilot project, but I'm sure they will have learned from this and will target more communities in more provinces.
Are you self employed and have children? You can legitimately split some income if you can have them complete some work: cleaning the office or shop, filing, etc. It has to be reasonable and yes you do have to actually pay them (cheque or signed receipt for cash).
For single parents, filing taxes can be tricky, especially when parents are separated or divorced but still actively involved in raising their kids.
As the parent who has primary custody of the child, you are the one who gets to claim the child amount, eligible dependent amount and the universal childcare benefit.
But in cases where there's not one clear primary guardian — when custody is shared 50/50 or 40/60, for instance — it can get much more complicated.
Single parents are allowed to claim one child as an "eligible dependant" (sometimes referred to as an equivalent-to-spouse credit). If there is more than one child and the parents have shared custody, then each parent can claim the eligible dependant amount for one child. If one parent pays child support, however, he or she can't claim this credit.
Child Tax Benefit amounts are renewed every July based on the previous year's tax return. Normally CRA will give late filers extra time — in the past you would still get your benefit in July. But this is the first year that late filers did not get their July 2014 Child Tax Benefit. I got a flurry of single parents in my office mid July to quickly get their taxes done so they could get their Child Tax Benefit again. I don't recall CRA announcing this to anyone (including us tax professionals), but they did it anyway. More incentives for everyone to have their taxes done as soon as possible.
Anni Markmann is a tax professional working, living, and volunteering in our community. Contact her at 204-422-6631 or firstname.lastname@example.org or 36 Dawson Road in Ste Anne.