One main criteria of Tax Tweet #1 and #2 is that only one parent can claim the tax credit for the child. If you are separated and have only one child together, this could be difficult as both parents may want to claim the tax credit. In this case, CRA will revert to the court ordered divorce or separation agreement to see if it is stipulated in the agreement. If a determination is not provided for in the agreement, and the parties cannot agree on who claims the child, then CRA has ruled that neither party can use the deduction. It would be a shame if this was to happen so please ensure you and your ex-spouse discuss this and come to an agreement.
Saturday, March 10, 2012
Tax Tweet #2: Children born after 1994 (for Tax Year 2011)
Parents of children born after 1994 receive a federal tax credit of $2131 in the tax year 2011. This results in a federal tax reduction of $320. Although your children may not live with you full time, you may still be eligible to receive this federal tax credit, assuming no one else is claiming it for the child.
Tax Tweet #1: Amount for Eligible Dependent
Tax Tweet #1: Amount for Eligible Dependent
For some situations, separated or divorced parents who have not lived common law over the previous tax year may be eligible to claim the amount for an eligible dependent. This claim can be huge. In 2011, the non-refundable tax credit was $10, 527 which would result in a reduction of federal tax payable of $1579 as well as an additional provincial tax credit, depending on your province or territory. In New Brunswick the provincial tax credit is about $958 for a combined tax reduction of $2537.
There are certain criteria to qualify for this claim such as the custody and living arrangements, any child support involved, is the child claimed by another parent, ect. So please consult a tax professional to find out if you are eligible for this credit. More details can be found on CRA website entitled “Can You Claim the Amount for An Eligible Dependent?” and What are the situations in which you cannot claim the amount for an eligible dependant?
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