Top 10 Tax Tips for Families

Ugh, it's tax season again. Don't make it any more painful than it has to be. Follow our top 10 tax tips for families to keep the government's toll to a minimum.

1. Take all the credit. (We don't mind.)

You or your spouse/common-law partner can claim expenses paid to an eligible daycare centre like Boulton. If you haven't already done so, please inform June whose name should appear on your tax receipt. Summer day camps and the like may also qualify for the child care credit.

2. Claim the kids.

Families are entitled to a $2,191 tax credit for each child under the age of 18. (That's a federal tax savings of $320 per child!) Bonus: Any unused credit can be transferred to your spouse/common-law partner.

3. Get active.

Whether you've got a little soccer player or ballerina on your hands, you can claim up to $500 per child of the cost of organized physical activity. Just be sure to double-check that your child's program of choice qualifies and always save your receipts.

4. Invest in the arts.

Similarly, the new children’s arts credit allows Canadians to claim up to $500 per child for fees relating to artistic, cultural, recreational or developmental programs, such as piano lessons, improv classes, Girl Guides, etc. As above, confirm a program's eligibility before making a claim.

5. Get what you deserve.

The Canadian and provincial governments offer a variety of benefits to help families cope with the monthly costs associated with raising a child in this country. It pays to educate yourself on the programs available.

The Canada Child Tax Benefit (CCTB) is a tax-free monthly payment for eligible families with children under the age of 18. The CCTB may also include the National Child Benefit Supplement (NCBS) and Ontario Child Benefit (OCB), where applicable.

Families who receive the CCTB may also qualify for the Ontario Child Care Supplement for Working Families (OCCS), a tax-free monthly payment for low- to moderate-income families with children under the age of seven (born prior to July 1, 2009). The maximum OCCS benefit for each child is $1,310 annually for single parents and $1,100 for two-parent families, less the amount of OCB received.

Designed to help offset the cost of child care for all working Canadian families, the Universal Child Care Benefit (UCCB) pays $100 per month per child under six. Unlike the CCTB and OCCS, the UCCB is taxable.

Mothers should apply for CCTB, UCCB and related provincial programs using the Automatic Benefits Application (ABA) as soon as possible after a child is born. If you failed to do so or are a new resident of Canada, you can apply for these benefits online at cra.gc.ca/myaccount. Families must apply for the OCCS annually. Qualifying families should receive an application form in April, provided they have filed their annual personal tax return(s).

(Note: Families of children with disabilities may qualify for further benefits in addition to those outlined above.)

6. Use public transit.

Do you take the TTC or Go Transit to work? If so, you can claim a non-refundable tax credit for your passes, including those purchased for dependent children under 19. To qualify, passes must cover unlimited travel for a period of at least one month. Electronic payment cards can be claimed if the card is used to make at least 32 one-way trips during an uninterrupted period of less than 31 days.

7. Get a SIN.

Apply for your child's social insurance number (SIN) as soon as he/she is born. Not only is a SIN required to open an RESP (see below), but your child will also need it when they enter the workforce as a young adult (e.g. paper route, babysitting, etc.).

8. Save for future education.

For those who can afford it, a registered education savings plan (RESP) is the best way to save for a child's post-secondary education. Parents can  contribute up to $50,000 per beneficiary over the lifetime of the plan. Better yet, Human Resources and Skills Development Canada (HRSDC) will add 20% to your contributions up to a maximum of $500 per year through the Canada Education Savings Grant (CESG). Additional incentives are available through the HRSDC for qualifying families (e.g. Canada Learning Bond).

Though RESP contributions are not tax-deductible, all investment income and government incentives are provided they remain n the account. When the money is withdrawn to pay for the child's schooling, those earnings are taxed in the child's hands. Fortunately, as a student, he/she will likely pay little to no tax on the money.

9. Track your medical expenses.

You may be able to claim a non-refundable tax credit based on medical expenses paid for you, your spouse/common-law partner or children in any 12-month period ending in 2012, not claimed in 2011. Tip: Identify the 12-month window in which your family's medical expenses were the highest and have the spouse/common-law partner with the lower net income make the claim. There is an additional credit of up to $1,119 available to working individuals with low incomes and high medical expenses.

10. Be resourceful.

There's no end of free public resources to help you and your family navigate your way through tax season. It's up to you to take advantage. Some of our favourites include:

A joint initiative of the Canada Revenue Agency and various community organizations, the Community Volunteer Income Tax Program (CVITP) provides free tax clinics and preparation services to low-income families.

Since 1969, the Institute of Chartered Accountants of Ontario has offered free CA tax clinics to low-income families. The clinics are held across the province from mid-February until the end of March.

The Certified General Accountants of Ontario (CGA) offers a similar tax-preparation service, which provides low-income families free, local access to tax experts.

Use the CGA's handy income tax checklist to make sure you have all the necessary documentation to complete your tax return.

The Toronto Public Library's Main Street branch is offering two free tax seminars worth checking out this spring: Income Tax and the Things You Should Know (March 14, 6:30 to 8 p.m.) and Lower Your Taxes Today (April 13, 6:30 to 8 p.m.). Register in person or by calling 416-393-7700.

Designed for first-timers, the Canada Revenue Agency's Learning About Taxes webinar covers the basics of taxation and how to file a return in a little over an hour—free!