Child Care Expense Deduction

Parents who claim babysitting expenses will be happy with the new enhancements to the child care expense deduction on line 214.

Effective 2015 and subsequent taxation years, the maximum dollar amounts that may be claimed for each child will increase by $1,000. For children under the age of 7, the maximum claim will increase from $7,000 to $8,000, for children aged 7 to 16 (and for infirm dependent children over the age of 16) the maximum claim will increase from $4,000 to $5,000, and for children who are eligible for the Disability Tax Credit the maximum claim will increase from $10,000 to $11,000.

Child Care Expenses can be deducted from the income of the lower-income spouse when the expenses are incurred to earn employment or business income, perform research or pursue an education. The maximum amount that can be claimed each year is limited to the least of:

    the total amount spent on child care expenses;
    two thirds of the lower-income taxpayer’s earned income; and
    the total of the maximum dollar limits allowed for all* children as mentioned above.

The amounts are claimed on Form T778 and receipts are required to back up the claim.

*Note that the third limit is applied to all children in the family, not just those for whom child care expenses are claimed.