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Explaining essential tax facts: Canada Caregiver Credit
10/21/2018 8:24:39 AM
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By Knowledge Bureau  | Thursday, January 18, 2018


 

TAX PLANNING FROM THE KNOWLEDGE BUREAU



By Evelyn Jacks

Did you know that starting in the 2017 tax year, the federal government has introduced a new Canada Caregiver Credit (CCC)? It replaces the Family Caregiver Tax Credit, the Caregiver Tax Credit, and the Credit for Infirm Dependants. But, it’s complicated! Here, in our first tax tip of the new 2018 tax filing season, we offer you a few details.

This credit comes in two parts. To make things easier to understand, we refer to them as a “mini” and a “maxi” credit:

A “Mini” CCC of $2,150 , which must be claimed for an infirm minor child or someone for whom you are claiming a spousal amount. Remember that the term spousal amount also includes an “eligible dependant” or a someone you are claiming as “equivalent to spouse.”

A “Maxi” CCC of $6,883 , or a portion thereof, may be claimed if you are supporting a spouse or eligible dependant whose net income is over $11,635. You may also claim this amount for infirm adults who are considered “other dependants.” But this larger credit is never claimed for a minor child.

In this series of articles, we’ll show how caregivers can make the claim for three different profiles of dependants, this week starting with infirm spouses:

Infirm spouses, common-law partners, and eligible dependants. This Canada Caregiver Credit is complicated for spouses because you may be able to claim the Mini CCC of $2,150 in conjunction with the spousal amount. However, if you can’t claim the spousal amount, then you may be able to claim part of the Maxi amount of $6,883. Three questions are important:

1. Can you claim a spousal amount over $4,733? That’s for your spouse who has net income under $6,902. If so, then you can add the Mini amount of $2,150.

2. Do you have a spousal amount under $4,733? There may be an additional claim for a partial Maxi CCC if you have a small spousal amount. That is, if the spousal amount is $4,733 or less, you get a top-up of your total combined CCC claim (Mini and Maxi) to $6,883, as follows: claim the spousal amount; claim the Mini CCC; and claim $6,883 minus the spousal amount minus $2,150.

3. Is your dependant’s income too high to claim the spousal amount? If your spouse’s income is between $11,635 and $16,163, claim the full Maxi CCC of $6,883. If your spouse’s income is between $16,163 and $23,046, claim the Maxi CCC minus your dependant’s net income over $16,163.

The good news if you are using tax software – it will do all of this for you! Remember, only one claim may be made for the Canada Caregiver Credit for your spouse or eligible dependant. No claim may be made for a dependant to whom the taxpayer is required to make spousal support payments, except in the year of marital change, when the taxpayer may claim either the dependant or the support payments made.

Note that the figures used to compute the CCC are indexed annually. For 2018, the $2,150 figure is indexed to $2,182; the $6,883 figure is indexed to $6,986, and so on.

Next time: We will look at claiming the Canada Caregiver Amount for minor and adult children.

This article originally appeared in the Knowledge Bureau Report, © 2018 by The Knowledge Bureau, Inc. Reprinted with permission. All rights reserved. Follow Evelyn Jacks on Twitter @EvelynJacks. Visit her blog at www.evelynjacks.com.

Evelyn Jacks’ latest book, Family Tax Essentials, is now available.

Notes and Disclaimer

©2018 by Fund Library. All rights reserved.

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

 
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