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With the tax deadline looming...
As a self employed person tax season makes me cringe! All the receipts and the required organization, every year catches me unprepared and running to meet the deadline. Thankfully my accountant sister, Amy Kroeze loves it and wrote a few words on the looming tax season!
Cornwall - March 26, 2012 - As a self employed person tax season makes me cringe! All the receipts and the required organization, every year catches me unprepared and running to meet the deadline. Thankfully my accountant sister, Amy Kroeze loves it and wrote a few words on the looming tax season!
With the tax deadline looming, many of us are starting to receive the standard paperwork required to complete our tax returns. We are accustomed to the T4â€™s from our employers and documents from our financial institutions providing us with RRSP investment details. This is the easy stuff it comes in the mail and is right there for us to add to our tax package but what about the other deductions? Slips of paperwork collected over the year from other sources, are you taking full advantage of the deductions available to you?
It is impossible to cover every tax situation or possible deduction but letâ€™s take a look at two of the more common deductions available to the general public.
I was shocked to hear a story the other day about a nurse who has two small children in daycare however was not aware that she was entitled to claim $4000.00 to $7000.00 per child in day care expenses on her tax return. So here are the rules:
- Child care expenses are deductible from income where both spouses, or spouse, in the case of single parent families, are working or where one spouse is attending school for all or part of the tax year. Childcare expenses can include daycare fees, boarding school, hockey school, or summer camp fees.
- If both spouses are working, the lower-income earner must claim the deductions. If the lower income earner is a full-time student, the deduction is available to the higher earner for the number of weeks the spouse attends school.
- The maximum youâ€™re allowed to claim under the childcare deduction is $7,000 for each child under seven at the end of the year, and $4,000 for each child over seven and under 16. For children with disabilities, you can deduct up to $10,000 the deductions cannot exceed two-thirds of your earned income.
The second deduction that comes to mind when thinking about taxes and children are sports and activity fees. Iâ€™m sure you may have caught a commercial on the radio or T.V recently but did you really understand what they were trying to tell you? Here on some of the basic rules from the CRA (this includes the Fitness Tax Credit and the Childrenâ€™s Art Credit):
a) Since 2007, a non-refundable tax credit has been available for eligible fitness expenses paid to register a child in a prescribed program of physical activity. The credit lets a parent claim up to $500 a year for each child under 16 years of age or under 18 years of age if eligible for the disability tax credit, at the beginning of the year in which an eligible fitness expense was paid. Expenses must be claimed in the same year they were paid. Children with disabilities are eligible for an additional credit.
Always ask for a receipt when registering your child. The organizations providing the program will determine the part of the fee that qualifies for the childrenâ€™s fitness amount.
b) Parents will be able to claim the 15-per-cent non-refundable Children's Arts Tax Credit on up to $500 of qualifying expenses per child incurred in 2011 and future years for a child who is under age 16 at the beginning of the tax year. The age limit will be 18 for children eligible for the Disability Tax Credit, and an additional $500 amount will be provided in those instances.
To qualify for the Children's Arts Tax Credit, a program must be:
â€¢ ongoing (either a minimum of once a week for at least eight weeks' duration, or five consecutive days);
â€¢ supervised; and
â€¢ suitable for children.
There a quite a few deductions available to you whether you have children or not. Feel free to visit cra-arc.gc.ca where you can find links and articles to all available deductions and tax tips. Also you may want to visit HERE to see the top 10 missed deductions, some you might not be taking advantage of.
Tax time may only come once a year however every day of the year we are working towards it. Hang on to your receipts and if in doubt take them to your tax preparer they will tell you if they are eligible deductions or not.
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