Child care expenses are a reality of working or going to school when you have children. Claiming child care expenses reduces the tax you pay. But unfortunately, it won’t translate directly into a refund since it is not a refundable tax credit.
The children must meet the CRA eligibility requirements:
- The child must be dependent on you, your partner or spouse
- They must be your child, your common-law partner’s or spouse’s child
- The child is under 16 years old, except for disabled children who are still eligible if they are dependent on you
- The child earns less than $12,069
Limits to claiming child care expenses
There are limits for claiming child care expenses, mostly considering the age of the child and their disability status.
- You claim every dollar you spend, up to $8,000 per child under 7 years old at the end of the tax year.
- Claim $5,000 each for children between 7 and 16 years old.
- Disabled dependent children who qualify for the DTC (disability tax credit) have no age limits. Claim up to $11,000.
- Claim $5,000 for disabled children over 16 if they do not qualify for the DTC but are still dependent and require care.
- Boarding school and overnight camp claims are up to $200/wk for children under 7 years, $275/wk for eligible disabled children, and $125/wk for children between 7 and 16 years old.
- Child care expenses don’t need to be paid directly for each eligible child. For example, if you have three kids. Your two teenagers don’t require any child care, but you have a 2-year-old who needs either daycare or a nanny during your workdays. You are still claiming child care expenses for three children. So, claim up to $18,000 based on the ages of your children and the limits for each. (i.e. 2 X $5,000 for the teens and $8,000 for the toddler).
- The earned income limitation requires that the deduction is limited to 2/3 of the lower-income spouse’s earned income.
Note: Line, 21400 Child Care Expenses, was line 214 before the tax year 2019.
Claiming Child Care Expenses of Different Types
Payments you make to nursery schools, daycare centres, nannies, camps, your child’s school and overnight boarding schools that provide child care are eligible.
If you pay individuals like a nanny or babysitter, ask them for proper receipts with their SIN or business number. You’ll need them if you are audited. It is much easier to ask for receipts beforehand than to get them at the end of the year.
- When the child’s parent, your spouse or partner babysits, it is not an eligible expense, even if you pay them.
- Paying relatives under 18 years old, like your other children, nieces or nephews, aren’t eligible, either.
- Hiring a babysitter for a night out.
- Educational institutions, like boarding schools or sports programs, tuitions are not deductible, but lodging is.
- Swimming lessons, Scouts and other recreational activities are not eligible.
- Any portion of your child care expenses reimbursed by your employer cannot be claimed.
Canadian taxpayers living outside of Canada will be claiming child care expenses under certain conditions. Most especially, keep your receipts!