PARENTHOOD may have its rewards but saving money isn’t one of them. From diapers and baby food to the senior prom, the cost of raising a child to age 18 in Canada is significant.
For working parents, one of those expenses in the early years is likely to be child care. Child-care costs vary depending on the child’s age and where you live, but it’s not uncommon for these costs to be upwards of $6,000 per year.
One consolation for that particular expense is that it’s tax deductible. Parents can claim up to $7,000 for every child under the age of seven, $4,000 for every child age seven to 16, and up to $10,000 for a child who qualifies for the disability tax credit.
"Keep track of your child-care expenses in order to maximize the amount you can claim," says Christine Van Cauwenberghe, tax and financial planning expert with Investors Group. She says many parents make the mistake of not claiming the maximum amount of eligible expenses.
That would be an opportunity lost, as child-care amounts cannot be carried forward to future years.
Parents are advised to report each child 16 and under on their tax return, whether or not they incurred any expenses for that child. That way they can claim the cumulative amount for the children.
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