How much can the Family Tax Cut save you on your next return?

Recent changes to the tax system could mean a larger return for your family this year. Discover if the family tax cut is a tool you can use.

Under Canada’s tax system, personal income is taxed at different rates, depending on the amount of taxable income the individual makes.

• For couples, if one person has a more taxable income than the other, they will commonly pay more tax than a couple with equal incomes.

In 2014, the Canadian Government announced new tax breaks that are focused on helping Canadian families make ends meet.

• One of them is the new Family Tax Cut, a non-refundable tax credit of up to $2,000 for families with children under the age of 18.
• It works by allowing the higher earning individual to transfer up to $50,000 of their income to their lower earning spouse or common-law partner to take advantage of their lower tax bracket.

• To qualify, you and your partner must be Canadian residents as of December 31st of the year you file your taxes.

• You won’t qualify if you or your partner served 90 days or more in prison or declared bankruptcy during the tax year.
• If you or your partner elected to split eligible pension income in the year, you also will not qualify for the Family Tax Cut.

• Keep in mind that if you plan to take advantage of the Family Tax Cut, either you or your partner can claim and receive the credit. You cannot both claim the tax credit individually.
• In the case that you and former spouse have joint custody of a child under the age of 18, you are both eligible to claim the Family Tax Cut credit.

There a lot of costs involved in raising children and when tax time comes around, it’s important to be aware of all the tax credits you are eligible for.

• The Family Tax Cut is only one of them and there are many more you can apply for such as the Child Tax Credit, Children’s Fitness Credit, Children’s Arts Credit, Child Care Deduction, Single Parent, and Children with Disabilities Credit.

Online tax software can automatically give you an idea of which parent can get the higher return for each credit and it’s always worthwhile to check before you submit.

If you’re thinking about filing your taxes online, it’s never been easier. All you need to have before you get started is your social insurance number and your date of birth.

Always file on time so you can ensure that there will be no interruptions to your returns.