Childcare Expenses General
The childcare expense deduction that a tax payer may claim for the 2014 year in respect to an eligible child, is defined by the income tax act subsection 63 (3). These are expenses that must be included on the tax return of the lower earning family member. Eligible childcare costs include daycare, babysitting, boarding schools and some camp expenses. Payments made to a related family member for daycare or babysitting services who are under the age of 18, are not valid deductions to be made towards the total of child care expense for the taxable year.
Claiming childcare costs
If a child lives with both parents, the parent with the lower net income must claim the expense deduction, this also applies to a parent who has no income, they must still claim the deduction under their tax return. The only cases where a higher income spouse may claim the deduction would only be, if during the year the lower income spouse / common-law partner was mentally or physically infirm, confined to a bed or a wheel chair, or attending a designated educational institution or incarcerated in a correctional facility.
How much can be deducted?
The allowable amount is $7,000 per child for the 2014 year, for a child who is six or under at the end of the year, and up to $4,000 for each child ages seven to fifteen at any time in the year. It is important to note that this limit is increased to $10,000 annually for a child that is eligible for the disability tax credit.