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| *Loan,banking and credit>>>child tax |
Are taxes lower for families with children? |
Two cases: Case 1: a family of 2 (2 adults) Case 2: a family of 3 (2 adults &1 child under 18) Would Case 2 pay less taxes? I'm filling out my taxes right now, and it seems that there'd be no difference in Case 1 & Case 2. How can this be? What am I missing? Hi AK, the answer to your question is NOT cut and dried. It depends on the NET INCOME of the family. I am in Ontario, and in case 2, with a child under the age of 18, there is a provincial tax reduction available for the spouse with the HIGHER NET INCOME. However, if the spouses income is too high, then the taxes for both families in case 1 and case 2 would be the same regardless of having the minor child. In case 2, depending on how much the NET INCOME is, there may be other credits available, such as GST tax credit, and provincial tax credits as per the ON479. The obvious difference is that case 2 would be receiving the CCTB for the child under the age of 18, and the family in case 1 would not. Since you didn't give numbers here to work with, I can only give you a general analysis of these cases. I hope this information helps you. Source(s): Tax consultant for 27 years and former CRA employee (on contract) All other things remaining equal, the family of 3 would get an extra deduction for the dependent child and pay less in taxes. you are taxed on your personal income-not family. If you work and your spouse does not or makes very little then you can calaim a dependant amount and your total payable (taxes they calculated you should or should have paid through out the year) goes down and your refund goes up. you cannot claim a child as a dependant (eqivelent to spouse) unless you are living single meaning that your total payable does not change. Either spouse can claim medical and child care costs (for the whole family)and use that as a deduction tho. family income is used to calculate GST and child tax benifit. so the only way either case could pay less tax is to up their deductions like medical and moving expenses. You tax to be paid is determined by the money you made during the year. It would be to your advantage to file your return truthfully. If you are living commonlaw or married and have a child-claim that. Remember, commonlaw happens either once you have been living together for a year or as soon as a child is living in the house with you two. You dont want to be a part of tax fraud. CRA likes to make a big fuss about it. They will post the story, either fine you or send you to jail if you cannot pay what you owe them and will monitor your tax returns for up to 10 years. They may also request proof of your marital status for previious years. It does not matter if you are telling the truth or not. If you cant prove it you are screwed tax preparer It depends if both parents are working in both scenarios, and if they had any deductions for child care or not. In addition, the family with a child may (if their income is low enough) also be entitled to more GST credits and, they may also be entitled to some CCTB payments. UCCB as well if the child is young enough. |
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