Instead of going into great depth about each credit, we’ll give you a simple rundown of what it is and how much it can help you save. As we go forward, the credits will be referred to as payments, refundable credits, or non-refundable credits, and their eligibility will be determined based on your income.
Refundable tax credits are used differently on your return than non-refundable tax credits. Credits that are not refundable are used to lower the amount of taxes that are due. When your taxes have been reduced to $0.00, the distinction is complete. Tax refunds on refundable credits are given to you in the form of credit once your taxes are zero.
Families who receive the Canada Kid Benefit get a monthly payment based on their income to help offset the rising expenses of having a child. Non-taxable benefits are not included in your taxable income when you complete your tax return since they are not taxable. From July to June, the monthly payments are processed. Thus whatever you paid in 2019 will be reflected in your monthly expenses from July 2020 to June 2021.
Most of the time, the parent with the lower net income is required to claim child care expenditures on behalf of an eligible kid. Separated parents who split custody of their children may be able to claim a part of the child care expenditures as their own. The higher-income spouse may be entitled to claim child care expenses if a doctor certifies in writing that the lower-income spouse cannot care for the kid due to a physical or mental incapacity.
In addition to these advantages, the Canada Learning Bond is a financial aid program for low-income families. If you create an RESP account and don’t contribute, you may apply for a free bond. This is an excellent method to begin saving for your children’s education. It costs $400 to get your first bond, and you may apply for more each year. We have a short film on the subject that I recommend you watch if you haven’t previously.
A qualified kid is your spouse’s, or your common-law partner’s child, or a child who was yours, your spouse’s, or your common-law partner’s child and whose net income in the year amounted less than or equal to the federal basic personal amount. Children under 16 years of age are not eligible except if the kid has a mental or physical disability.
NON-REFUNDABLE CHILD CARE Costs
You might be eligible for a non-refundable tax credit if you preserved thorough receipts for child care expenditures you paid. Generally, you may claim a cost as long as it was spent to enable you to do the following actions:
- Go to work and manage your own company if you have one.
- Complete your education, from kindergarten through high school, by attending classes full-time.
- Continue the research for which you were awarded a grant.