2014 is the first (and possibly the only!) year when the government has given us the choice to try to reduce the tax payable by a 2-parent family with children under the age of 18. The maximum benefit has been restricted to $2 000 although they say that the parents are allowed to “split” up to $50 000 of income on their federal (not provincial or territorial) taxes. It’s really just a math-intensive way to give a credit to your federal income tax payable. In fact, there are 2 pages (Schedule 1-A) of math! So I was curious to see if StudioTax would automatically calculate and apply this new benefit to a tax return for a married couple with young children, like mine.
Did StudioTax Calculate the Family Tax Cut For Me?
Yes.
I ran a test case with a married couple with 2 children under the age of 18 filing their 2014 tax return. When asked at the beginning if I wanted to create returns for both husband and wife at the same time I said yes. I also entered the usual information about the dependent children because they need to be listed to claim the Children’s Fitness and/or Children’s Arts amounts. I did not input any extra information directly intended to prompt the program to try to apply the new “tax splitting” for the Family Tax Cut.
StudioTax went ahead and did it though.
Where Does StudioTax Report the Tax Savings Created by this New Family Tax Cut
The actual amount that this pretend “income splitting” is saving you is reported on Line 423 of Schedule 1.
The detailed calculations are in Schedule 1-A.
Do I Recommend Using a Tax Program to Calculate the Family Tax Cut?
Maybe.
It’s not particularly difficult to complete Schedule 1-A by hand with a pencil and a calculator. It is dull and time consuming though.
Given that you can use StudioTax or GenuTax Standard tax software for free, I’d recommend you at least double check your work by using a tax program.
How Much Did We Save Thanks to the Family Tax Cut?
Well, let’s just say we can afford one more dim sum lunch this year but not necessarily with soft drinks. Fortunately I love the tea our local restaurant provides!
Related Reading
- Does StudioTax Calculate This New Family Tax Cut Income Splitting Reduction For Me?
- Why Do They Announce These Tax Breaks in Such a Misleading Way?
- How to Download Free Tax Software to NETFILE Your 2014 Income Tax Return
Join In
Did you benefit from this Family Tax Cut? Or is it just another source of irritation to you? Should the government really be spending its time tinkering at this level with our tax forms? Please share your views with a comment.