Claiming moving expenses and child care deductions - Segment 5
Host: Welcome to the segment called Claiming moving expenses and child care deductions, part of the Canadian Students and Income Tax video.
With me is Sandra Moore.
Subject matter expert: Thank you Janice.
Host: There are many expenses and deductions we can use to lower our taxes. Are there any that Canadian students can also use?
Subject matter expert: Two common deduction amounts for students are moving expenses, and child care deductions.
Host: What rules apply for moving expenses?
Subject matter expert: You can deduct moving expenses if you move to take courses as a full-time student. You can deduct moving expenses only from the taxable part of scholarships, fellowships, bursaries, certain prizes and research grants.
You can also deduct moving expenses if you move to work, including summer employment, or to run a business. However, you can deduct these expenses only from employment or self-employment income you earned at the new location.
Host: What is the definition of a full-time student?
Subject matter expert: You are considered a full-time student for the purpose of claiming moving expenses if you regularly attend a college, university or other educational institution that offers courses at a post-secondary school level and you take, during a semester, at least 60% or more of the usual course load for the program you've enrolled in.
If you are a co-op student who attends school for an academic period and you work in a business or industry that relates to your studies for a similar period of time, you are considered to be a full-time student only during the time you attend school.
For the purpose of claiming moving expenses, do not include correspondence courses as part of your course load.
Host: Is there a minimum distance I have to move to qualify for the moving expense deduction?
Subject matter expert: Yes, there is. Your new home must be at least 40 kilometres closer to your school or place of work.
Host: When can a student claim the moving expense deduction?
Subject matter expert: If you are eligible to claim the moving expense deduction, you can claim it at the start of each academic period.
Host: What happens if my moving expenses are more than the taxable portion of my awards, do I lose that part of my claim?
Subject matter expert: If your eligible moving expenses are more than the taxable scholarships, fellowships, bursaries, certain prizes, and research grants that you received and reported on your return for the year, you can deduct the unused part of those expenses from the taxable awards you receive and report in the following years.
Host: I didn't pay some of my moving expenses right away so I missed the tax year. Are those expenses lost?
Subject matter expert: If you are paying moving expenses after the year that you moved, you may be able to claim them on the return you file for the year you actually paid the expenses. So if you moved in August of 2010 but didn't pay some of the expenses until January 2011, you may claim the expenses you paid in January 2011 on your 2011 income tax and benefit return.
You may carry forward unused amounts until you have enough eligible income to claim them.
More information is available on the CRA webpage on moving expenses and in the following publication: T1-M, Moving Expenses Deduction
The link is included in the Related links for this segment.
Host: You said child care expenses were also a common deduction for students. How is a child care expense defined?
Subject matter expert: A child care expense is incurred when you or your spouse or common-law partner paid someone to look after your child so one of you could earn income, go to school, or conduct research. The expenses are deductible only if, at some time in the year, the child was under 16 or had a mental or physical impairment.
Host: Are there any rules on who qualifies as an eligible child care provider? For example can my spouse be an eligible child care provider?
Subject matter expert: There are some rules that apply when child care services are provided by an individual. That individual cannot be the child's:
- father or mother;
- a supporting person of the child;
- a person for whom you or a supporting person of the child has made a tax credit claim on your returns; or
- a person who is under 18 years old and is related to you by blood, marriage or common-law partnership or adoption, such as, your brother, sister, brother-in-law or sister-in-law, or your spouse's or common-law partner's child.
A niece, nephew, aunt or uncle is not considered related for these purposes.
Host: Who is a supporting person?
Subject matter expert: A supporting person of an eligible child of a taxpayer for a tax year means another person who lived with the taxpayer at any time during the year and at any time within 60 days after the end of the year and who is the child's parent, the taxpayer's spouse or common-law partner or an individual who has claimed a tax credit for the child for the year.
Host: What type of child care expenses can I claim?
Subject matter expert: You can claim payments for child care expenses made to:
- caregivers who provide child care services;
- day nursery schools and day care centres;
- educational institutions, for the part of the fees that relate to child care services;
- day camps and day sports schools where the primary goal of the camp is to care for children or, boarding schools, overnight sports schools or camps where lodging is provided.
Advertising expenses and placement agency fees you paid to locate a child care provider may also qualify.
Host: Are there any child care expenses that I cannot claim?
Subject matter expert: You cannot claim medical or hospital care, clothing or transportation costs. For payments made to an educational institution, you cannot claim the part of the fees that relate to educational costs, such as tuition fees of a regular program or a sports study program. Also, you cannot claim fees paid for leisure or recreational activities such as tennis lessons, nor can you claim the annual registration fees paid for extracurricular activities such as Scouts or Guides.
More information on child care expenses is available in the publication Child Care Expenses.
The link is included in the Related links for this segment.
Host: My child's school has a sports program that I have to pay fees for. Can I claim them?
Subject matter expert: Some expenses may not qualify for the child care expenses deduction. However, they may qualify for the children's fitness amount or the children's arts' amount if they meet the rules for claiming these amounts.
For more information on the children's fitness amount go to www.cra.gc.ca/fitness.
For more information on the children's arts amount go to the CRA webpage on that topic.
These links are included in the Related links for this segment.
Host: Are there any other situations where I can't claim my child care expenses?
Subject matter expert: You also cannot claim the child care expenses if you or another person received or is entitled to receive a reimbursement of the child care expenses or any other form of assistance, and if the amount of reimbursement or assistance is not included in the recipient's income. If your employer paid the child care expenses on your behalf, you can claim the part of the expenses included in your income for the year.
Host: What documentation do I need to include with my return when claiming the child care deduction?
Subject matter expert: The individual or organization who received the payments must give you a receipt showing information about the services provided. In the case of an individual they should also include their social insurance number. You don’t need to send these receipts with your return but you need to keep them in case the CRA asks for them.
Host: Who claims the deduction?
Subject matter expert: If you are the only person supporting the child, you can claim the child care expenses you incurred while your child was living with you. If more than one person is supporting the child, the person with the lower net income, even if that income is zero, claims these expenses. However, the person with the higher income may still be able to claim the child care expenses if the lower income earner was enrolled in an educational program or if another specific situation applied.
For more information on other situations or to make your claim, see Form T778, Child Care Expenses Deduction.
Host: Thank you Sandra.
This concludes the segment called Claiming moving expenses and child care deductions part of the CRA's Canadian Students and Income Tax video. Thank you for watching.
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