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How Does Becoming a Parent Impact Your Tax Situation?

April 10, 2024
How Does Becoming a Parent Impact Your Tax Situation?

Becoming a parent can change your life in many ways. Several tax credits and allowances are available in Quebec to support families with children. Below are a few examples of tax measures that can affect a parent’s tax situation in Quebec.

Childcare expenses are tax deductible. The parent with the lowest income can deduct up to 78% of their employment income. The maximum deductible amount per child varies based on the child’s age and the type of childcare service.

Please note:

  • Childcare expenses are tax deductible up to a certain amount.
  • A tax credit for childcare expenses may also be available.
  • These credits can significantly reduce your tax bill.
  • Both workers and students can deduct childcare expenses.
  • Bear in mind that the amount of expenses you can deduct each year is limited.

Expenses related to physical and artistic activities for children are eligible for a refundable tax credit of up to $500 per child per year. This tax credit is reduced based on the family income.

Child Disability Benefit

  • Parents of children with a disability can avail of the Child Disability Benefit.
  • The credit amount is based on the severity of the disability.
  • This credit can significantly reduce your tax bill.
  • Click here to find out more about the Disability Tax Credit.

Child Tax Benefit

  • The Child Tax Benefit is a non-taxable monthly benefit.
  • The eligible amount under the Child Tax Benefit depends on the number and age of your children and your family income.
  • A supplement for children with a disability is also available.
  • You must submit a request for the Child Tax Benefit to the Canada Revenue Agency.

Being a single parent can have an impact on your tax situation. For example, a single parent can claim the amount for an eligible dependent. This non-refundable tax credit can reduce their tax payable.

Medical Expense Tax Credit

  • Medical expenses related to pregnancy and childbirth may be tax deductible.
  • These expenses must reach a certain threshold in order to be deductible.
  • Certain medical expenses related to childcare may also be tax deductible.

Other tax measures are available and other factors may influence the tax situation of parents in Quebec. Understanding the range of available credits and deductions is important. We strongly recommend that you consult a tax professional who can provide personalized advice based on your family situation.

  • Keep all your receipts for expenses relating to your children.
  • Be aware of the applicable tax filing deadlines.
  • Contact a tax professional where necessary.

Click here to find out more about tax credits for medical expenses.

How do child support payments fit into the picture? In fact, parents have a legal obligation to provide for their children’s needs. This is why child support payments were put in place. They are often ordered by the Court.

Do you know whether you have to declare support payments? Indeed, this depends on whether the support payments are for your children or your ex-spouse. The parent may deduct the support paid by their ex-spouse to reduce the amount of tax payable. If a parent receives support payments for themself, they must include the payments in their income.

Please note:

If the court order or written agreement does not distinguish between support payments for children and those for an ex-spouse, the total amount is considered a child support payment. In this case, the individual who receives support payments is not taxed on the amount received. Click here to find out more about support payments and how they impact your tax situation.

In short, don’t forget to claim all the credits and deductions you are entitled to. If you have any doubts, contact us. Our experts are here to help you prepare and get the most out of your income tax returns.