The Child tax credit amount is a refundable tax credit from Quebec. It aims to recognize the costs related to the work, the pursuit of studies or the search for a job that parents must bear to provide childcare services to their children.
For the 2018 taxation year, the tax credit for childcare expenses resulted in an estimated tax expenditure of $ 707.9 million [3]. For the 2015 taxation year, a total of 504,676 individuals claimed this credit. Women (57%) were more likely than men (43%) to request it.
Parameters and calculation
An individual can claim this credit if he or she lived in Quebec on December 31 of a given year and if the childcare expenses were paid by him or his spouse on December 31 for an eligible child who lived with one of them. In addition, these expenses must have been incurred while one of them was employed, carried on a business, carried out research for which he had received a subsidy, exercised a profession, actively sought employment, attended an establishment of education or if he received benefits from the Quebec Parental Insurance or Employment Insurance Plan. These fees must also have been paid to an individual, a day care center, a day camp, a boarding school or a summer camp to provide child care services.
This tax credit is established based on family income; different credit rates are provided for different family income brackets. Certain paid child care expenses are eligible for the tax credit while others are not. In addition, the credit parameters are indexed annually. The request for this is made during the filing of the tax return or by a request for advance payments. An individual and his or her spouse can share the tax credit between them if they are both entitled to it.
The calculation of the tax credit varies according to three parameters: 1) the amount paid for eligible child care expenses for eligible children; 2) the ceiling for eligible childcare expenses according to the age or situation of the eligible child; 3) the rate of the tax credit established according to family income.
Eligible child
The child must meet one of the following conditions to be considered an eligible child in 2024:
- He must be at most 16 years old and be the child of the individual or his spouse;
- He must be at most 16 years old and be dependent on the individual or his spouse and his income for the year may not exceed $ 10,482
- He must be the child of the individual or his spouse, be dependent on one of them and have a disability;
- He must be dependent on the individual or his spouse, have a disability and have an income for the year not exceeding $ 10,482
Ceiling on childcare costs
In order to better take into account the cost of childcare expenses, the 2018 Quebec budget announced two modifications applicable to the maximum annual amounts that can be claimed.
The first modification was to increase the annual limits applicable to the fees paid for the care of, and the second, aimed at the indexing of the amounts annually from 2024. Thus, for 2024, the limit applicable to the care expenses paid to the for a child with a severe and prolonged impairment in mental or physical functions is $ 13,220, the ceiling applicable to childcare expenses paid in respect of a child who does not have such an impairment and who is elderly under the age of 7 at the end of a year is $ 9,660 and the limit for other eligible children is $ 5,085.
The annual limit is applicable to the fees paid in respect of a child suffering from a severe and prolonged impairment in mental or physical functions, IRS forms allows the fees paid according to a tariff to be taken into account in the calculation of the tax credit. daily up to $ 50.85 for full-time child care.
Credit calculation
The calculation of this credit is done in five steps :
- Calculate the amount of childcare costs:
- Establish the amounts of childcare expenses that are eligible and that are incurred for an eligible child while taking into account the limits provided for the fees paid to a residential school or a summer camp,
- Establish family income ;
- Determine the applicable rate based on the family income established in step 2;
- Multiply the custody fees established in step 1 by the applicable rate identified in step 3 in order to obtain the amount of the tax credit;
- Decrease the amount obtained in step 4 by the amount requested by the spouse for this credit in his declaration.
Request for advance payments
It is also possible for the individual to claim the tax credit for child-care expenses in advance rather than waiting for the time of filing his tax return. To be entitled to advance payments, in addition to having incurred childcare expenses for the purpose of holding a job, pursuing studies or doing subsidized research, the individual must reside in Québec at the time of the request, be the biological or adoptive parent of the child and must live with the latter. He must also estimate that he is entitled to a tax credit amount of more than $ 1,000 for the year. However, this condition does not apply if the individual believes that he is entitled to a work premium of more than $ 500 for the year in question [19]. This request will allow the individual to receive monthly credit payments every 15th day of the month [20]. The rate schedule for calculating the credit for the year 2024 according to the estimated family income, for a request for advance payments, can be consulted on the Revenu Québec website.
Good to know and points to remember
Here is a non-exhaustive list of some things to know and remember.
- Unlike the federal government, which calculates the deduction for child care expenses based on earned income, Quebec does not have this limitation. Thus, it suffices that child care expenses be incurred while the taxpayer (or his spouse) was employed, carried on a business, carried out research for which he had received a subsidy, exercised a profession, actively sought employment, attended an educational institution or if he received benefits from the Quebec Parental Insurance or Employment Insurance Plan .
- All the contributions fixed by the government, which are paid for childcare services offered by a childcare center, by a family childcare service or by a daycare center, or for basic school childcare services, do not represent eligible expenses. The same is true for the additional contribution for subsidized educational childcare services.
- To receive the tax credit for childcare expenses in advance, the taxpayer must be registered for direct deposit. In addition, to receive the amount in 12 installments, the request for advance payments must be sent to Revenu Québec no later than December 1 of the taxation year preceding the year for which the request is made.
