What’s New for Tax Time for Your 2015 Return Due April 2016 If You Have Children?

It’s that most horrible time of year again: tax time. I got my forms in the mail and took a peek at the T1-General Guide. I don’t usually look at car accidents but somehow I can’t help but look at the tax guide once I see it sitting on the table….Here’s what I found that’s new for a 2015 tax return for filers who have children.

Why Did I Get a RC62 Universal Child Care Benefit Statement in the Mail?

If your children were 6 or older but younger than 18 you may have received payments last year of the revised Universal Child Care Benefit.  It may have been quite a while since you last received any UCCB and you may have forgotten that it is taxable. Or at $60/month per eligible child aged 6-17, you might not even have noticed the money landing in your account.

Now, unfortunately, since the election is long past, we have to pay the taxes on that money.

That’s right, they didn’t withhold any taxes at source but the “benefit” is taxable income in the hands of the lower-earning parent.

So I will get to pay back about half of what we received.

There is also no longer any non-refundable tax credit for having a child of any age.

You report the amount you received, which is reported in Box 10 of your RC62, on line 117 of your return if you are the lower-net-income spouse or common-law partner.

What Happened to My Federal Non-refundable Tax Credit for My Children?

You used to claim $2 255 per child of the appropriate age on the Federal Tax Schedule 1 form on line 367. (By the time you finished the math, it was only 15% of that amount, or $338.25 per child.) If you are looking for it on the 2015 schedule, you won’t find it.

The problem with the non-refundable credit was that if a family was really low income, they weren’t paying any tax so they could not apply the credit to save any money.

Starting in 2015, the credit has been removed and instead all families get a taxable Universal Child Care Benefit. If the family is really low income, they will not have to pay any tax on this benefit and therefore it will help them. If a family has a moderate or high income, they will have to pay back some or a lot of this benefit both as federal income tax and as provincial income tax.

If your income was $75 000 a year before the $720 a year benefit for your one 7-year-old child, you will probably only get a benefit of $483 after tax in Ontario, based on using the Ernst and Young 2015 online personal tax calculator.

That’s about $145 more than the old non-refundable tax credit gave you. But it’s a lot less than the $720 that the advertisements were bleating about before the election!

If your income was $200 000  a year before the $720 a year benefit for your one 7-year-old child, you will probably only get a benefit of $346 after tax in Ontario, based on using the Ernst and Young 2015 online personal tax calculator. That’s very close to the old $338.25 per child that the non-refundable tax credit covered.

New Tax Form: The T4-A(P) for the CPP Children’s or Child’s Benefit

Many taxpayers have been dismayed to open envelopes this month and find a new tax slip: a T4-A(P) for their child or children’s benefit received from the CPP because one of the child’s parent’s has died. In previous years the government did not automatically send out this slip.

You can read what needs to be done with the slip by the parent, or child, over on Helpful Crooks.

Stay tuned for more exciting tax news!

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Does your mail box suddenly start overflowing around this time of year with tax slips? Did you get any new ones this year? Please share your experiences with a comment.

How Will the Government Know to Send Me the New Child Benefit Money for my Older Children?

Last fall, the Harper government announced they would change some of the children’s tax benefits. One change is they will start paying a monthly amount per child aged 0 – 17 years of age to the lower-income parent. This is an extension of the UCCB which used to pay a benefit only until the child was 6 years of age. When they made the announcement, I wondered how they were going to know who had children and what age they were: today I found out.

Watch for a Letter to Confirm the Ages of Dependent Children

In the mail today, I received a letter from The Canada Revenue Agency. It asks me to confirm the names and birth dates of our children. They plan to use this information to issue the “enhanced” Universal Child Care Benefit, UCCB, if any of our children are eligible.

What If One of My Eligible Children Isn’t on the List?

A simple correction of the name or birth date can be made by writing a letter with the correct information and mailing it back in the addressed envelope provided.

If a child is not listed at all, you can apply for this and other benefits online or by mailing in a completed Form RC66 in the enclosed envelope. In both cases, additional documentation may need to be provided.

When Will I Start Receiving this “Enhanced” UCCB for my Older Children?

According to the letter, payments will start in July 2015.

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Did you receive a letter listing all your offspring? Please share any quirks in the program with a comment.