Common tax deductions in Canada: children, medical expenses and moving expenses

Tax deductions offer a golden opportunity to reduce your taxes and increase your savings. In this article, we'll examine three important tax deductions: those for children, medical expenses, and moving expenses. By learning how to use these deductions, you can better manage your budget and enjoy considerable financial benefits.

Tax Deductions for Children

Families with children are eligible for several deductions that can ease their budget. The child tax credit is one of the best known. For example, for 2023, this credit can reach up to $2,000 per child, depending on your income. If your adjusted gross income is $75,000 or less, you are eligible for the full credit.

Additionally, childcare expenses are deductible. If you hire a nanny or enroll your child in summer camp while you work, you can deduct up to 35% of these expenses. This can result in savings of several hundred dollars per year. For example, if you pay $5,000 per year for childcare, this could earn you a credit of $1,750.

The Canada Child Benefit (CCB) is a tax-free monthly payment from the federal government. Its calculation depends on family income and the number of dependent children. In addition, families with a child with special needs can benefit from an additional Child Disability Tax Credit , which helps reduce the amount of tax payable and ease the financial burden on parents.

Deductible Medical Expenses

Medical expenses can quickly become a burden, but did you know that some of them can be deducted from your taxes? Qualified medical expenses, such as hospital bills, dental care, and prescription drugs, are deductible if they exceed 7.5% of your adjusted gross income. For example, if your gross income is $60,000, you must first exceed $4,500 in medical expenses to qualify for this deduction.

Also consider health insurance premiums. If you're self-employed, these premiums are fully deductible. Organize your receipts and keep track of all your expenses, including medical appointments and transportation costs. Being organized can save you time and hassle when filing your taxes.

Deductible Moving Expenses

If you've moved for a new job, you may be able to reduce certain expenses. This includes transporting your belongings, storage fees, and even travel expenses for you and your family during the move. To be eligible, you must move at least 50 miles from your old home.

Moving expenses can add up significantly. For example, if you spend $2,000 on a moving truck and $500 on lodging, you may be able to recoup some of these costs by deducting them. Be sure to keep all receipts related to your move to make this process easier.

Eligible expenses:

• Transport and storage of your goods.

• Gasoline, meals and accommodation during the move.

• Notary fees related to the sale of your old house.

• Termination of a lease.

Condition: Your new home must be at least 40 km closer to your job or school.

Strategies to Optimize Your Deductions

To make the most of these tax deductions, here are some effective practices:

• Keep accurate records : Keep all your receipts and documents. This simplifies your tax return and prevents errors.

  
  

• Review tax credits : In addition to deductions, explore available tax credits. For example, the family dependency tax credit or the credit for the purchase of certain school equipment.

  
  

Also, consult a professional if you have any doubts. They can offer you personalized advice to maximize your savings. Keep in mind that tax rules are subject to change. Stay informed about the latest updates to avoid missing out on opportunities.

Impact of Tax Deductions on Your Budget

Taking advantage of tax deductions in Canada is a smart way to optimize your personal finances. Child tax credits, medical expenses, and moving expenses are among the most common, but there are also deductions for education, RRSPs, charitable donations, and much more.

Mastering tax deductions can transform your financial situation. By understanding available deductions and keeping a clear record of your expenses, you can reduce your tax burden and increase your savings. Don't forget to consult a professional if you have any questions. By investing time in your tax planning, you can maximize your financial benefits and save significantly on your taxes.