Summer Childcare – What’s tax deductible?
If you paid child care costs out of your own pocket this summer, be they to a daycare center, babysitter, summer camp, or another childcare provider, you might be able to deduct those expenses on your tax return. Here’s a guide to which summer childcare expenses are allowable deductions at tax time.
Daycares and Other Professional Providers
Whether it’s a licensed daycare facility, nursery school, or in-home care, the fees paid to the provider are generally considered eligible childcare expenses. In the case of an organization (such as a daycare centre), your receipt should contain information about the services provided as well as the name and address of the organization.
For individual providers (such as day homes), the receipt must also contain the Social Insurance Number (SIN) of the individual. The receipts can be in either your name or your spouse/common-law partner’s name, regardless of who claims the expense at tax time.
Summer camps are a terrific opportunity for your children to enjoy the outdoors, learn new things, or sharpen their skills in a particular sport/hobby. As long as the primary goal of the camp is childcare, the expense is an allowable deduction. Age usually determines whether a sports camp qualifies. For example, a five-year-old child who attends a hockey day camp needs constant supervision/care. If your 15-year-old is invited to attend a hockey day camp that is goal-oriented and uses sophisticated training methods, chances are the expense would not qualify as a childcare expense.
If your child attends an overnight camp, you may not be able to claim the entire expense. Because of the expense caps (ranging between $125 and $275 per week), the camp you’ve paid $500/week for your child might only translate to a fraction of the actual expense.
Siblings and Other Relatives
Many parents opt to have a family member assume childcare duties through the summer. Although this option may work better for your situation, money paid to certain relatives won’t deliver a tax deduction. The Canada Revenue Agency (CRA) excludes several relatives as eligible childcare providers for tax purposes depending on the age of the provider and if you, the parent, claim certain credits.
For example, expenses in the following situations are not deductible:
- If your elderly mom lives with you and you claim the caregiver or eligible dependent credit for her, she is not considered to be an eligible childcare provider for tax purposes.
- If you employ your 17-year-old to look after your seven-year-old, that expense is also excluded.
The amount of childcare expense you can claim is capped by the age of the child in most cases, the limits are:
- A child less than 6 years of age at the end of the tax year (that cannot claim the disability amount): $8,000/year.
- A child between the ages of 7 and 16 at the end of the tax year (that cannot claim the disability amount): $5,000/year.
- A child for whom the disability amount may be claimed: $11,000/year.
Because in most cases the lower income earner must claim childcare expenses, there’s another limit you should consider. Eligible childcare expenses are capped at 2/3 of net income. For example, if you have a four-year-old child and you earn $9,000 net income in 2019 the maximum you can claim for childcare expenses is $6,000.
There are a few expenses that taxpayers may overlook that do qualify as childcare expenses.
- If you placed an ad to find a provider, the cost of the advertisement is an eligible childcare expense.
- Fees paid to placement agencies or other mandatory registration fees qualify as childcare expenses.
- Generally, childcare expenses are only valid if you’re working or attending school. There are exceptions. For example, if you have a temporary leave of absence from work (such as maternity leave fees you pay for your other kids’ childcare during this time may be eligible.)