When my first son was born, I soon learned this major life milestone would impact me in more ways than one. Aside from the joys of motherhood, it would also change my tax situation for the better. If 2013 was an exciting year for you thanks to a first child or first home, here’s a breakdown of how your tax return may be impacted.
Most hospitals provide the information to register your child with the Canada Revenue Agency (CRA) to ensure you start receiving all the new parent benefits.
- Canada Child Tax Benefit: Depending on your income, you may qualify for this monthly payment, meant to help with the cost of raising a child. This income is not taxable.
- Universal Child Care Benefit: New parents will receive the Universal Child Care Benefit (UCCB), which provides families with $100 a month per child until the age of six. This is considered income and must be reported by the lower-income spouse.
- Child Tax Credit: Parents can claim $2,234 for each child younger than 18. This results in $335 in tax savings per child.
- Maternity leave: This EI income is taxable and can result in a tax bill at the end of the year.
- RESP: Deposits into a Registered Education Savings Plan can qualify for a Canadian Education Savings Grant, which provides some matching funds up to 20 per cent of the first $2,500 deposited each year, so it may be best to start early.
It can be heartbreaking to see how much tax comes out of your first paycheque, but you may have a tax credit waiting to be claimed. If you carried forward tuition and education credits while you were in school, you can use the credits to help lower your tax liability. For example, a $10,000 carry forward of student credits will mean $1,500 in tax savings.
Congratulations on tying the knot. You should notify the CRA of your new marital status with an RC65 Form – Change of Marital Status. Spouses file their own tax returns but should include their partner’s SIN and net income on the first page.
Household income is used to calculate benefits like the GST/HST amount and Canada Child Tax Benefit, so the amount you receive could be impacted.
First-time home buyers can claim a $5,000 credit, which translates into $750 in tax savings. The credit can be split between a couple if both spouses or common-law partners qualify as first-time homebuyers. There is no specific receipt or slip needed to make this claim, but you should have the paperwork on hand to prove you bought a house in 2013 if the CRA asks.
Dealing with major life changes can be stressful enough on their own, so if figuring out your tax credits and deductions is adding to your stress, you may want to consider an online tax preparation software program like H&R Block Tax Software. The program guides you through step-by-step tips to identify every possible deduction or credit, calculates your return as you go and ensures you get your maximum refund. You can even file one return for free until March 31!
If you would rather leave it to an expert, you can drop by an H&R Block office where a tax professional will review your previous returns for free. But no matter which method you use, making sure to maximize the tax benefits that can come along with a major life change is always a good idea.
80 thoughts on “Tax Tips for Life’s Major Milestones from H&R Block”
great tips, adorable photo!
I love how they are tying our taxes in with life’s milestones. We had a baby this year and it’s way more fun doing our taxes when we look at taxes as our “story”!
for the past 5yrs. I’ve had my own professional tax lady and wow what a difference it makes, wished I’ve gone there long before the 5yrs ago
I have done accounting my whole life so I do my taxes and my family and friends as well
Thanks for the tips! This was just what I needed!
So many things one doesn’t think of. Thanks for the info!
Really awesome and practical tips! Thanks for all of the info!
some great tips as i will be doing my own taxes this year thanks.
Wow thanks for all the great Tax Tips!!!
I have always done our taxes the old pencil and paper way. But now that ‘They’ are doing away with sending out the packets, I found a free H&R Block tax software kit at my local post office! Guess I have to get with the times and modernize lol!