New shoes. Larger cars. After-school programs. Growing your family to include kids can add to your costs but during tax season you can also benefit from a little financial reprieve. When completing your 2014 tax returns consider these four tax incentives:
In our family my husband reports a higher income than I do, not unlike many families. This means we often pay more federal income tax as a couple than if we had equal taxable income.
The Family Tax Cut is a new non-refundable tax credit of up to $2,000 for eligible couples with minor children. Starting in the 2014 tax year, couples in which one spouse earns more than the other can benefit from this by transferring up to $50,000 of the higher earners income to the lower earner in order for the higher earner to be taxed in a lower tax bracket.
Families have been able to deduct for expenses associated with having someone look after their child, usually claimed by the spouse or common-law partner with the lower net income (even if it is zero), but the 2015 tax year has increased the deduction limit:
- For each child who is eligible for the Disability Tax Credit, the deduction limit is $10,000;
- For each child who is under seven years of age at the end of the year, the deduction limit is $7,000; and
- For each child who is under 16 years of age or had an impairment in physical or mental functions, the deduction limit is $4,000.
Although this increase won’t benefit your 2014 return, you may be able to reduce the amount of tax being withheld from your income during the year.
The Children’s Fitness Tax Credit encourages families to register their children in programs based on physical activity by enabling them to claim eligible fees paid in the year. Families can now claim up to a maximum of $1000 per child (up from $500) against registration or membership fees paid in the year.
Also to note, starting this 2015 tax year the Children’s Fitness Tax Credit will be converted to a refundable tax credit. This means if the total for your credit is more than the tax you owe, the Canadian Revenue Agency sends you a tax refund for the difference.
Currently the Universal Child Care Benefit (UCCB) provides families with up to $1,200 per year for each child under six. Starting with the 2015 tax year, this amount will increase to $1,920 and a new benefit of up to $720 a year for each child 6-17 years old will be added. These changes will take place starting January 2015, reflected in monthly payments starting in July 2015.
Although not specifically geared toward families, the follow new tax incentives may also be of interest to you:
- GST/HST Credit Administration
- Small Business Job Credit
- Search and Rescue Volunteer Tax Credit (SRVTC)
- Amateur Athlete Trusts
- Donations of Ecologically Sensitive Land
- Donations of Certified Cultural Property
Keeping on top credits, deductions, and tax incentives can feel like a daunting task. Using software like TurboTax can take the stress out of tax season, searching through more than 400 deductions and credits to ensure nothing is missed. Add to that, easily accessible and helpful services like ProReview and Online Help.
You might even be eligible to give TurboTax a try for FREE either online or on your desktop. A system that makes completing and filing taxes much easier means less time stressing over the process and more time planning on how to use your tax refund.
This post was sponsored by TurboTax.