Can I write off the baby?
(NC) Having a baby is one of life's major milestones. While the cost of clothes, bottles and diapers can't be written off, there are a number of benefits that arrive with the new addition.
“As soon as your little one arrives, make sure you register the baby with the Canada Revenue Agency,” says Cleo Hamel, a senior tax analyst with H&R Block. “This triggers valuable benefits and credits for the new parents.”
The Universal Child Care Benefit (UCCB) is $100 per month until your child turns six. The benefit is taxable. But the Canada Child Tax Benefit (CCTB) and GST/HST credits are based on household income and neither credit is taxable.
Families can also claim the $2,234 Child Tax Credit, and that means you will receive about $335 in tax savings per child younger than 18. Either parent can claim the child amount and unused amounts can be transferred to the other parent.
Hamel says that new moms are often surprised to learn that maternity leave income is taxable. “New parents must report Employment Insurance (EI) benefits as income,” says Hamel. “In most cases, not enough tax is withheld and many new parents find themselves facing a tax bill at the end of the year.”
While post-secondary education may seem years away, Hamel also recommends considering Registered Education Savings Plan (RESP) early. You may qualify for a Canada Education Savings Grant (CESG) which provides some matching funds up to 20 per cent of the first $2,500 deposited each year. Parents contributing to an RESP will enjoy an extra deposit from the government and the child will claim the income once he or she is a student.
“When it comes to babies, the expenses can seem endless,” says Hamel. “It's important that parents take advantage of the many benefits and tax deductions available, because every little credit can make a big difference on their tax return.”
More information is available online at www.hrblock.ca.
Word count: 316
Articles are provided free of charge. Articles appearing on web sites, must credit www.newscanada.com. Articles appearing in Print, must credit News Canada with (NC) at beginning of an article or – News Canada at the end. Any source/sponsor of the information quoted in the text must also be identified as presented. Images are only to be used with corresponding editorial copy. Usage of News Canada articles constitutes your acceptance of these terms and an agreement between you and News Canada.