Last time we talked taxes together we discussed the basics surrounding the claiming of child care expenses. This time, share more essential tax facts to help you maximize your tax savings for each dollar you spend on child care.

First to review, the maximum claim for eligible taxpayer is the least of the amount actually paid to eligible child care providers, or two-thirds of earned income. The following maximum dollar limits are then applied:

• $4,000 for each child aged seven to 16 or those infirm dependants for which the Disability Amount cannot be claimed plus
• $7,000 for each child under seven or those infirm dependants for which the Disability Amount cannot be claimed plus
• $10,000 for each disabled dependant for whom the Disability Amount can be claimed

There are special rules, however, for students with children. In addition to the limitations for all taxpayers, students have the following limitations on their child care expense claims. Full-time students are limited to:

• $100 for each child age seven to 16, plus
• $175 per child under seven, plus
• $250 per disabled child for whom the Disability Amount will be claimed times the number of weeks of full-time attendance

Part-time students are limited to:

• $100 for each child age seven to 16, plus
• $175 per child under seven, plus
• $250 per disabled child times the number of months of part-time attendance

Generally, child care expenses claims may only be claimed by the lower-income spouse (or common-law partner). The lower-income spouse is the one whose net income, before claiming child care expenses, is the lowest.

The higher income spouse may only claim child care expenses during periods in which:

• the other supporting person was a full- or part-time student
• the other supporting person was incapable of caring for the children because of mental or physical infirmity for a period of at least 2 weeks
• the other supporting person was confined to a prison or similar institution for at least two weeks
• the taxpayer has separated from the other supporting person due to a breakdown in the relationship for a period of at least 90 days, but where reconciliation has taken place within the first 60 days after the taxation year

The claim will be restricted to the same $100, $175, or $250 weekly or monthly maximums discussed above, depending on the circumstances.

In Part 3, coming soon, we’ll show you how the claim for child care expenses can help your family save money on other refundable and non-refundable tax credits on the tax return.

For more information and to obtain a copy of Essential Tax Facts by Evelyn Jacks, call toll free 1-866-953-4769 or visit Evelyn’s website: www.knowledgebureau.com.