T778: Child care expenses deduction

What’s in this article?

 

What is this?

You will use form T778: Child care expenses deduction to calculate the child care expenses you can claim on your tax return.

Child care expenses are amounts you or another person paid to have someone look after your child so that you or the other person could:

  • Earn income from employment;
  • Carry on a business either alone or as an active partner;
  • Attend school (conditions apply); or
  • ​Carry on research or similar work, for which you received a taxable income

The child must have lived with you or the other person when the expense was incurred. Generally, only the payments for services provided in Canada by a Canadian resident can be deducted.

If you are a resident of Québec, you must complete Schedule C to calculate and claim child care expenses.

 

Am I eligible?

If you paid for child care expenses for an eligible child during the year and meet certain conditions, you can claim a deduction for child care expenses. An eligible child is:

  • Your or your spouse’s or common-law partner’s child; or
  • A child who is dependent on you or your spouse or common-law partner, and whose net income for the tax year is below the maximum specified by the Canada Revenue Agency (CRA).

The child must have lived with you or your spouse or common-law partner when the child care expense was incurred.

The amount you can claim for child care expenses you paid can’t be more than two-thirds of your earned income for the year. Click here for more information on what qualifies as earned income.

 

Canada Revenue Agency (CRA) says…

You can claim payments for child care expenses made to:

  • caregivers providing child care services;
  • day nursery schools and daycare centres;
  • educational institutions, for the part of the fees that relate to child care services;
  • day camps and day sports schools where the primary goal of the camp is to care for children (an institution offering a sports study program is not a sports school); or
  • boarding schools, overnight sports schools, or camps where lodging is involved (read the note in Part A of Form T778, Child Care Expenses Deduction).

When the child care services are provided by an individual, the individual cannot be:

You cannot claim payments for medical or hospital care, clothing, or transportation costs. For payments made to an educational institution, you cannot claim the part of the fees that relate to education costs, such as tuition fees of a regular program or a sports study program. Also, you cannot claim fees paid for leisure or recreational activities, such as tennis lessons or the annual registration fees paid for Scouts.

 

If you are the only person supporting the child, you can claim child care expenses you paid while the child was living with you.

If you had another person living with you (e.g. spouse or common-law partner, child’s parent, or another person claiming an amount for the child) at any time in the tax year and in the first days of the next year, the person with the lower net income (including zero income) must claim the child care expenses. There are exceptions where the person with the higher net income can claim some or all of the child care expenses. Click this link for more information.

Note: If you paid an amount that qualifies as a child care expense and the children’s fitness amount or art’s amount, you must first claim the expense as a child care expense. Any unused amount can be claimed for the children’s fitness or art’s amount, as long as eligibility requirements are met.

 

Revenu Québec says...

You can claim the refundable tax credit for childcare expenses that you or your spouse paid if all of the following requirements are met:

  • You were resident in Québec on December 31, or you were resident in Canada, outside Québec, on December 31, and you carried on a business in Québec.
  • The childcare expenses were incurred while you or your spouse on December 31, was 
    • carrying out the duties of an office or employment;
    • actively carrying on a business;
    • practising a profession;
    • carrying out research under a grant;
    • actively seeking employment;
    • attending an educational institution full time, that is, you or your spouse was enrolled in an educational program of at least three consecutive weeks, in which students must devote at least 10 hours per week to courses or assignments related to the program;
    • attending an educational institution part time, that is, you or your spouse was enrolled in an educational program of at least three consecutive weeks, in which students must devote at least 12 hours per month to courses related to the program; or
    • receiving benefits from the Québec parental insurance plan (QPIP) or benefits related to a birth or adoption under the Employment Insurance plan.
  • You or your spouse on December 31, paid the expenses for the care of an eligible child, to an individual, a daycare centre, a holiday and recreation centre, a camp or a boarding school. In addition, the child was living with you (or with your spouse on December 31) at the time the expenses were incurred.
  • The childcare services were provided in Canada by a person resident in Canada, unless you were living outside Canada temporarily.

Note: The reduced contribution, set by the Québec government, of $7.30 per day per child does not qualify for the tax credit. Click this link for more information on what qualifies as a childcare expense.

You must also have a receipt for expenses paid which must state:

  • Your or your spouse’s or common-law partner’s name;
  • Services provided;
  • The name of the organization providing the service, or if an individual provided the service, the receipt must include the name, address, and social insurance number of the person; and
  • A stamp or signature.

 

Where do I claim this?

Important: Before you begin, ensure that you have told us about your dependants. To do this:

  1. Click the HOME tab.
  2. Click the ABOUT YOUR DEPENDANTS icon. Enter all the required information about your dependants.

Note: If you want to enter more than one dependant, click the +Add Another Dependant button on your screen.

 

Once you have told us about your dependants, follow these steps to claim your T778: Child care expenses deductions:

  1. Click the name of your dependant on the left-hand navigation panel.
  2. Under the EXPENSES section, click the checkbox for Child care expenses (T778). You will find yourself here:

  3. Scroll to the bottom of the page and click Continue.

When you arrive at the page for Child care expenses (T778), enter your information into the tax software. 

 

Where can I learn more?