Results 1 to 2 of 2
  1. #1
    Expert Forum User The Ultimate London Mom!
    Anonymous's Avatar
    Join Date
    Sep 2007
    Rep Power

    Default Childcare deductions? How much do they really help you?

    If I make $45K and my DH $80k and we pay $25k a year in childcare for 4 kids then how much of that $25k do we save or see back when we submit it on our taxes etc? I don't fully understand how it works? Do we get a percentage back, does it just save us some taxes? Help?

    We are trying to figure out whether me staying home is an option or not.
    ~ "A friend is one who walks in when the rest of the world walks out."~


  2. #2
    Expert Forum User
    strongmommy's Avatar
    Join Date
    Sep 2006
    Old North
    Rep Power


    Hi there,

    The deduction for childcare is a straight deduction off your taxable income so they reduce the income you need to pay tax on. Just like an RRSP deduction.

    The amount of tax you save depends on the tax bracket you're in but since the lower income spouse must claim the amounts it's usually around 21%. In the situation you describe, a person making 45K claiming $25K in childcare would save about $5,200 in tax - so instead of paying around $7000 in tax each year off your paycheque/at the end of the year you'd pay around $1,900. Ignoring the costs you may spend on clothes and transportation and food for work, in this situation you're probably left with about $15,000 of cash income for the year after paying for the childcare, taxes and CPP/EI on this level of income.

    If you decide to stay home and not have daycare costs then your husband could claim a spousal credit for you which would save him about $2000 in tax owing. A spousal credit is only available if your married/common-law and one person has no income or low income. If you stay home, have no daycare costs and your husband claims the spousal credit you're family cash would be lower by around $13,000 for the year.

    I hope this helps and doesn't just feel like numbers - let me know if you want more info or have a different example
    Last edited by strongmommy; 05-26-2011 at 05:02 AM.

Similar Threads

  1. Does anyone know about tax deductions?
    By LoveMyGirls22 in forum Chit Chat
    Replies: 2
    Last Post: 02-02-2011, 08:47 AM
  2. renting a room and tax deductions
    By Carol in forum Ask the Accountant
    Replies: 1
    Last Post: 02-27-2010, 02:02 PM
  3. hdc income tax deductions
    By magzaloo in forum Child Care Providers
    Replies: 4
    Last Post: 01-31-2009, 03:34 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts