The turning of the calendar marks an exciting time – changes to diet, priorities and in the income tax business, changes to the tax rules.
It can be overwhelming trying to remember all the tax rules and laws for many people. Understanding any new ones that come out might make some think twice about preparing their own income tax return.
For those who have children under 18 years old, this years’ tax changes will have an impact.
For example, the amount of children’s fitness activities has increased from $500 to $1,000, resulting in a maximum impact of $75 on income tax owing. This is good News for those active kids who like to be involved. It certainly will help parents pay for all those activities.
The biggest change for this year is the Family Tax Cut. It is also referred to as “family income splitting”, but this isn’t exactly correct.
An example of actual income splitting is “pension splitting”, which was introduced a few years ago. This occurs when income is transferred directly from one spouse to another.
The new family tax cut will calculate a non-refundable tax credit for the higher income spouse, based on a calculation that estimates what the combined tax owing would be if both spouses had equal income.
In order to qualify for this credit, applicants must file income tax returns together. The credit is worth up to $2,000 and can result in a significant difference in taxes owing for parents of children under 18 in different tax brackets. This year will also bring some changes – an increase in the amount for Child Care Expenses by $1,000 and an increase in the amount received from the government for the Universal Child Care Benefit.
Submitted by BE Sure Financial, 201 Isabella St., Arthur.
