Claim your child care costs

Did you know that you can claim up to $7000 in child care expenses for every child you have under 7 years of age? Even if your children are ages 7 through 16 you can still claim up to $4000 for any expenses. What qualifies as childcare expenses? Daycare, Boarding school, certain expenses for camps, and even babysitting. With 1 child in daycare it can cost you an average of $700 a month, that’s $8400 for a year!

So how does this benefit you? If you were making $50,000 a year and claimed the full $7000 amount you would get approximately $2000 back on your tax return from the government. Sounds too good to be true doesn’t it?

Let me show you how this works:
$50,000 in Income
Approximate Federal and BC taxes payable on $50,000 = $8686

The amount you claim in child care expenses lowers your income that is subject to tax, similar to how an RRSP works.

Now you claim your $7000 in child care expenses, lowering your taxable income to $43,000
Approximate Federal and BC taxes payable on $43,000 = $6607

$8686- $6607 = an extra $2079 on your tax return.

For more information on the child care expenses deduction, or any other questions contact Greg at First Choice Tax Services (250) 753-7888.


 

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