How much will I benefit if I get receipts for child care? (Canada)

Question

I am returning to work soon and will pay approx $13,000/year for care for my little one. I would appreciate feedback as to whether I am understanding the value of claiming child care on taxes...

I earn approx $35,000/ year and as I understand it, I can claim $8,000 on taxes for his day care, so when claimed my taxable income would be $27,000.

On 35,000 (not claiming child care expenses): 15% for federal tax = 5,250 7.7% for NL tax = 2,695 = $7,945 in taxes

On 28,000 income (claiming child care expenses): 15% for federal tax = 4,050 7.7% for NL tax = 2,156 = $6,206 in taxes

So, basically I would save approx $1,739 in taxes if I claim child care expenses?

Thanks for your input!

Answer 1

Yes, you are correct in estimating how much you would save on your federal and provincial income taxes.

You could also consider any other government benefits which may increase as the child care receipts will reduce your family net income which is what many are based on. These would include working income tax benefit, GST credit, medical tax credit, and child care benefit.