Claiming child care expenses (special cases)
Pre-test question
Sorry, that's incorrect
The spouse with the lower net income must claim the deduction for child care expenses, unless there exists a special situation as described on Form T778, Child Care Expenses Deduction.
That's correct
The spouse with the lower net income must claim the deduction for child care expenses, unless there exists a special situation as described on Form T778, Child Care Expenses Deduction.
Instructions
- Open the tax software
- Review the Background information and Required slips (tax slips, receipts, etc.)
- Provide all required information for the appropriate sections of the tax software
- Once completed, compare your results with the solution provided
- Afterwards, refer to Key points of the tax software and the Takeaway points
Background information
Situation
Ryan lives with his wife Jessica and their two children, Jace and Jackie. Although Ryan worked full time at the beginning of the year, he was hospitalized on February 20, 2025 and was not discharged until August 28, 2025. He soon returned to work part time while his wife continued to work full time as a grocery store manager. During this time, their two children attended daycare.
| Category | Value |
|---|---|
| Name | Ryan Samson |
| Social insurance number (SIN) | 000 000 000 |
| Address | 123 Main Street City, Province X0X 0X0 |
| Date of birth (DOB) | November 15, 1983 |
| Marital status |
Married to: |
| Number of children (2) |
Son: Jace Samson |
Required slips
T4 – Statement of Remuneration Paid (For Ryan)
Text version of the above image
T4 – Statement of Remuneration Paid
Protected B
Employer's name: Paint colours Inc.
Employee's name and address:
Last name: Samson
First name: Ryan
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 14: Employment income: 16,000.00
Box 16: Employee's CPP contributions - see over: 150.00
Box 18: Employee's EI premiums: 190.00
Box 22: Income tax deducted: 900.00
Box 24: EI insurable earnings: 16,000.00
Box 26: CPP/QPP pensionable earnings: 16,000.00
Box 45: Employer-offered dental benefits: 3
T4 – Statement of Remuneration Paid (For Jessica)
Text version of the above image
T4 – Statement of Remuneration Paid
Protected B
Employer's name: Smart produce Inc.
Employee's name and address:
Last name: Samson
First name: Jessica
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 14: Employment income: 34,000.00
Box 16: Employee's CPP contributions – see over: 200.00
Box 18: Employee's EI premiums: 230.00
Box 22: Income tax deducted: 1,800.00
Box 24: EI insurable earnings: 34,000.00
Box 26: CPP/QPP pensionable earnings: 34,000.00
Box 45: Employer-offered dental benefits: 3
RC210 – Advanced Canada workers benefit (ACWB) statement (For Jessica)
Text version of the above image
RC210 – Advanced Canada workers benefit (ACWB) statement
Issued by: Canada Revenue Agency
Samson, Jessica
123 Main Street
City, Province X0X 0X0
Social insurance number: 000 000 000
Box 10: Total Basic Advanced Canada workers benefit: 759.00
Over the Rainbow Daycare receipt
Text version of the above image
Over the Rainbow Daycare receipt
123 First St
City, Province X0X 0X0
Tel no.:476-123-4567
Business no.: 11111111RT0001
January 25, 20XX
To whom it may concern:
Ryan Samson and Jessica Samson paid the following amount in 20XX for child care services for their children:
Jace Samson (son)= $2,500.00
Jackie Samson (daughter)= $2,500.00
Should you have any questions please do not hesitate to contact me.
Sincerely,
Rebecca Smith
Program Supervisor
Review your results
Solution to Claiming child care expenses (special cases).
Key points of the tax software
Important note
To access complete instructions on the various steps of entering data into the software, click on the title of each section below.
Ryan's interview
- Click T4 and employment income in the left-side menu
- Click the + sign next to T4 income (earned in any province except Quebec) in the T4 and T4E section
- Enter the required information from the T4 slip
Jessica's interview
- Repeat the same steps you did for Ryan
Advanced Canada workers benefit (RC210)
- Click Other information slips in the left-side menu
- Click the + sign next to RC210 – Canada workers benefit advance payments statement [Federal line 41500]
- Enter the information from the tax slip
Child care expenses - special cases
- Click Interview setup in the left-side menu
- Tick the box next to Child care (special cases) in the Parents and children section
- Click Child care (special cases) in the left-side menu
- Click the + sign next to A special situation allows you to claim child care expenses even though your earnings are higher than your spouse’s
- Enter the number of weeks during the year when any of the special cases listed applied to their situation
Jace's interview
- Click Dependant ID in the left-side menu
- Select the appropriate option from the Relationship drop-down menu
- Enter the child’s date of birth
- Select No from the Did this dependant have any income in 20XX? drop-down menu
- Click Child care in the left-side menu
- Click the + sign next to Daycare (includes day camp)
- Enter the amount paid for that child
Jackie's interview
- Repeat the same steps you did for Jace
- Repeat the same steps you did for Jace
Takeaway points
- The Child care topic was automatically added to the tax software’s left-side menu for Jace and Jackie because of the birth year entered on the Dependant Identification page
- The child care expenses must be entered in the profile of the child for whom the expenses were paid
- in this case, the amount of $2,500 was entered under the profiles of Jace and Jackie
- Generally, the spouse or common-law partner with the lower net income claims the child care expenses deduction unless a special case exists and is entered into the tax software
Child care expenses - special cases
- In special cases, the spouse with the higher net income can claim the child care expenses if the other spouse:
- attended school while enrolled in a part-time or full-time educational program
- was unable to take care of the children because they were mentally or physically infirm
- was incarcerated for a period of at least two weeks
- In this case, Jessica has the higher net income and can claim the full amount of the child care expenses because Ryan was temporarily hospitalized
- The tax software automatically generates form T778 and calculates the total amount of eligible child care expenses
- this amount is reported on line 21400 of Jessica’s tax return