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Tax Tips for the Terrible Twos and Under

Kids are a credit: Parents can claim the $2,101 Child Tax Credit for each child under the age of 18. This will result in a federal tax saving of $315 per child. And if one parent cannot use the entire amount to lower their tax payable, the unused amount can be transferred to a spouse or common-law partner.
  • Signed up for kinder gym? The Children's Fitness Amount is a non-refundable credit is worth up to $500 for children under the age of 16 enrolled in an eligible program of physical activity. Not every program meets the eligibility guidelines so you need to ensure you know the requirements. Make sure you keep your receipts. Disabled children will qualify for an advanced credit if they are under 18.

  • Monthly benefits: The Universal Child Care Benefit is available to any family with children under the age of six regardless of the household income. Each child under six is eligible for the $100 per month benefit. UCCB is taxable in the hands of the lower-income spouse. If you are a single parent, you now have the option of including the UCCB benefits in the income of the child for whom you are claiming an amount for an eligible dependant.

  • Fill out the paperwork: Upon the birth of a child, parents should complete Form RC66, Canada Child Tax Benefit Application and send it to the CRA. This form will register their child for the GST/HST Credit and Universal Child Care Benefit (UCCB) as well as the Child Tax Benefit. Some provinces now allow you to do this on the birth registration form.

  • Save for future education:  Designed to help save for a child's post-secondary education, parents can make up to $50,000 RESP lifetime contribution. There are also no longer any annual limits on RESP contribution. Canada Education Savings Grant (CESG) per year is $500.

  • Claim child care: Keep all your receipts for child care expenses. From daycare to nannies, child care expenses can be claimed by the lower income spouse on their tax return. Unfortunately, any unused amount cannot be claimed by the higher income earner unless there was a period of separation of 90 days or more or the other spouse was in school, prison or the hospital.

  • Canada Learning Bond: Designed to help lower income families the Government provides $500 in a CLB at birth for children whose families are entitled to the National Child Benefit Supplement. As long as the family is still entitled to the supplement, they will receive an additional $100 CLB each year until the age of 15.

  • Get a SIN: It may be too early to put them to work but apply for a social insurance number upon as soon as your child is born. You will need this in order to open an RESP.

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