An Easy Way to Get $800 Back From the Tax Man

Did you know? The arts, including Kindermusik, qualify for tax refunds and credits! Check out the article below to learn about the government’s arts-friendly/ family-friendly initiatives. You can print a statement of fees-paid right from MY ACCOUNT on our website.

Children’s activities can reap spring windfall

By Evelyn Jacks
Reprinted from The Toronto Star
August 22, 2011

Did you just drop a bundle on school supplies, and performance enhancing running shoes as you prepared for a new school year? Fortunately, financial relief may be only a tax return away. Just keep the right receipts and you’ll get a bigger tax refund come spring. In fact, if you take advantage of all the provisions below, depending on the criteria, you may save $800 plus per child this year.

Children’s Fitness Tax Credit

Claimable since 2007, this credit recognizes eligible expenses for sports and fitness activities taken by each child under age 16, up to a maximum of $500. (Parents of a disabled child under 18 get to claim more.) Some interesting activities qualify–sailing, bowling and golf lessons, for example, in addition to the more typical hockey and soccer.

In your pocket: You’ll save 15% of every dollar you fork out, up to the limits above. That’s a maximum of $75 for each healthy child. Since this is a non-refundable tax credit, it offsets federal taxes you otherwise pay. No benefit, in short, to those who pay no federal tax.

Children’s Arts Tax Credit [KINDERMUSIK QUALIFIES!]

New [in 2011] is a federal tax credit for costs of participation in artistic, cultural, recreational or developmental activities. It includes literary, visual and performing arts, music or language lessons, too. Costs of instruction, equipment, uniforms, facility rental and administration costs included in the registration or membership fees qualify.

In your pocket: Expect your refund to grow by up to another $75 as described above. Again, that’s a maximum of 15% of $500, used to offset other federal taxes payable. Not allowed: fees paid for programs that are part of a regular school curriculum. Nor are costs for travel, meals and accommodation. Be careful to choose programs of the right length, too. [Kindermusik qualifies!] Your tax adviser can help you decipher the rules or visit the Canada Revenue Agency’s website [regarding other programs you may have your child enrolled in].

Ontario Children’s Activity Tax Credit [KINDERMUSIK QUALIFIES!]

This credit [became] available on your Ontario Tax Credit Form in 2010. It lets you claim up to $500 paid for each eligible child in an eligible activity. (Double that amount if you spend at least $100 on an activity for a disabled child).

In your pocket: You get back 10% of all the money spent on eligible activities, or $50 more, per child, on top of the value of your federal credits. The good news about this one is it’s refundable–you’ll get it even if you don’t pay provincial taxes.

Child-Care Expenses

You may have enrolled your little ones in summer daycamp, while you work, but the “prescribed” activities may not qualify for the credits above. They may, instead, qualify for the deduction of for child-care expenses, which means you could get more bang for your buck. An increased Canada Child Tax Benefit is possible too. Child-care expenses must be claimed by the spouse who earns the lower income, with no benefit if one spouse is a stay-at-home parent, has a very low income, or non-qualifying income (such as Employment Insurance benefits, for example). Where an activity qualifies for both the deduction and the tax credits, it must be claimed as child-care expenses. The balance can be claimed via the tax credits.

In your pocket: Because this is a deduction, not a credit, claiming a child-care deduction will provide a larger marginal tax benefit, the higher your income. For example, at the top marginal tax rate in Ontario, you’ll get back close to half of your $500 costs, as opposed to a maximum benefit of $75.

[Further  savings can be acquired for medical expenses, and public transportation costs. Speak to your tax adviser or visit www.cra-arc.gc.ca for details.]

Recover Refunds on Missed Claims

If you forgot to make any claims in the past, you can always request an adjustment to prior filed returns. There is a maximum 10-year period for most corrections. To tap the [2002] tax year make a request before Dec 31.

In your pocket: The sky’s the limit, depending on number of kids, activities, medical conditions, babysitters, and income level. Stash the refund in your children’s post-secondary education savings. Then, remind them often that with the right education, they’ll be financially set to enroll you in that luxury retirement residence (the one with the hot tub)!

Winnipeg tax expert and author Evelyn Jacks’ latest book is Essential Tax Facts. She is president of The Knowledge Bureau which offers professional development to tax and financial services advisers.

 

 

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