Everything you need to know about tax credits and deductions for families

It’s not easy to keep up with and understand all the tax credits and deductions available to families. Take the time to review the various tax benefits available, and you may be able to reduce your tax bill or even get a refund on your next tax return. Find out more in this financial column by financial planner Julie St-Cyr.

What deductions is my family entitled to?

Here’s an overview of the different family situations that can generate tax credits from the Quebec and federal governments.

• If you have children under 18, you may be eligible for the Canada Child Benefit, a tax-free monthly payment made to eligible families by the Canada Revenue Agency (CRA). If your child has a severe and prolonged impairment in physical or mental functions, you may be eligible for an additional amount through the Child Disability Benefit (CDB).
  
  
• If you have dependants – your children or other family members – you may be eligible for a dependant tax credit.
  
  
• If you live alone with your children, you may be eligible for Revenu Québec’s amount for a person living alone.
  
  
• If your child attends a childcare facility– a private daycare, day camp or summer camp – your family may be eligible for a childcare tax credit. To find out more, check out our article on the subject.
  
  
• If you pay medical expenses, you may – subject to certain conditions – be eligible for tax deductions for expenses such as special care for disabled children, ambulance services, dental care, eyeglasses and contact lenses, laser surgery and hospital parking.
  
  
• If your children take part in artistic, cultural, recreational or sports activities, in Quebec, the expenses may qualify for a tax credit of up to $100 per child if your family income is $146,450 or less.
  
  
• If you or your children attend a post-secondary institution, you may be entitled to tax credits for tuition or examination fees.
  
  
• If you have adopted a child, the adoption expenses you paid may qualify for a tax credit.

For a complete list of all the deductions available to families, please see the Canada Revenue Agency and Revenu Québec websites.

What assistance is available for single-parent families?

A number of the above-mentioned tax credits and programs apply to parents living alone with their children. If you are in this situation, you are entitled to the amount for an eligible dependant. And if you live in Quebec and are the only occupant of your home, you may be eligible for the amount for a person living alone as well as the additional amount for single-parent families.

What tax credits are available for low-income families?

In addition to the tax credits mentioned above, there are tax measures specifically designed to help low-income families. For low-income workers with children, there is the Canada Workers Benefit. The amount you receive depends on your family income.

In addition, low- and moderate-income families may qualify for GST/HST credits. Delivered in the form of tax-free quarterly payments, these credits allow you to recover the GST or HST you paid on goods and services you purchased.

Transferring tax credits from one spouse to the other: Something you should know

In certain situations, tax credits can be transferred from one spouse to the other. This tax strategy can be beneficial if one spouse does not have sufficient income to claim the credits, by allowing the other spouse to use the available credits. It could reduce your family’s overall tax bill.

An RESP for tax-sheltered savings

Keep in mind that a Registered Education Savings Plan (RESP) is an excellent way to save for your children’s post-secondary education.² The contributions are not tax-deductible, but they do attract government grants.³ Deposited directly into your RESP, the grants supplement your investment. Educational Assistance Payments (EAPs), which are made up of accumulated income and grants, are taxable for the beneficiary when withdrawn. In most cases, students are in a lower tax bracket, which means they do not have to pay any tax.

Julie St-Cyr, Financial Planner