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Like many milestones, this one can be used as a “teachable moment” for kids and parents.
Q. I have three children, aged 14, 17 and 18. All have part-time jobs and make less than $3,000 per year, which they receive T4s for. They also all make charitable donations.
I have four quick questions for you: Do I need to file income taxes for them? Can I still claim them as dependents? Do I need to claim their income on my tax return? And can I claim their charitable donations?
–Brad
A. Before I answer your questions, I’d like to congratulate your children. I find that most teens are eager to work, and by doing so, they gain valuable skills that will serve them now and in their future careers.
While you do not need to file returns for them (in general, any Canadian who earns $12,069 or less per year doesn’t need to file), I always urge parents to get their children into the habit of filing an annual return as soon as possible, as it teaches them to be responsible citizens. (It also shows them early on that a tax return isn’t something to be afraid of!) And by filing a return, they will start to establish some Registered Retirement Savings Plan* (RRSP) room so they can begin to contribute at age 18.
I also recommend that you file together as a family, as this will allow you to claim all the family credits you are eligible for—and so that, yes, you can claim your children’s charitable donations as a family on the return which will provide the best tax result. That means more possible savings for your family as a whole.
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You will not be taxed on your children’s income as they are each filing individual T1 personal returns. You will be able to claim them as dependants as long as they are a minor (meaning they are not yet 18 years of age) or are still in school, college or university.
Finally, it’s important to note that once each child turns 18, you are no longer be eligible to claim the HST credit for that child. Rather, each adult child can claim this credit themselves.
Theresa Morley, CAP, CA, is a partner with Morley Chartered Accountants in Barrie, Ont. Check out her blog.
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If a parent files for a dependent child who has income (per a T4 slip), is it also not correct that the child’s income is deducted from the dependent’s $12069 amount, essentially increasing the amount of income tax paid by the parent? This what my 2020 Tax software has automatically done. so in a sense you are paying more tax because of the child’s income.
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
Was there an answer of to the question Patrick asked?
Also wondering if Patrick’s comment was addressed.