Do I have to include my dependent 16yr old sons income of $8000 on my tax return if he has filed his own return?

[gpspaw]

I'm a single parent can I claim my son as a dependent and not include his income on my return? When I include his income in the section asking if the dependent has earned income it reduces my refund to owing. I am also transferring UCCB to him but will not let me file my return. I see there is an error with this as many people have asked the question. What is the work around?

[TurboTaxJeffrey · Accepted solution]

When you make a claim for Eligible Dependant you are required to report the dependant's income, and yes, this will reduce the amount of the credit you are able to claim. 

When you decide to show the UCCB as the income of your dependant, that is also included as part of the income.  If you have more than one child, you can claim the dependant with the lowest net income...however you do have to include the UCCB as part of the income.  If your son is your only child, then you would report his income as $8000 + the amount of the UCCB.  If you do have more than one child, you are required to report the full UCCB received as income of the child you choose as eligible dependant.  If you do not choose to include the UCCB as your son's income, you must include that as part of your own income, and be subject to the tax on that income.  Even if your income falls within the lowest tax bracket, you will tend to save some money by claiming the UCCB as your dependant's income, as provinces have certain amounts of income that can be earned before the provincial eligible dependant credit is reduced.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/117-eng.html

[gpspaw]

I was told that a dependent's income  under 18yrs of age did not have to be included on my tax return. Why would I have to include there income and reduce the amount of credit I receive when they have income below basic personal amount and are unable to claim BC tax credits when under 19 yrs?

[TurboTaxJeffrey]

You aren't including your son's income as part of your own...but it does reduce the amount of the credit you can claim.  Please refer to the following links from the CRA website.  The link to the Schedule 5 shows the calculation of the credit, including the requirement that it be reduced by the dependant's net income.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/305/rtrn-eng.html

Schedule 5
http://www.cra-arc.gc.ca/E/pbg/tf/5000-s5/5000-s5-15e.pdf

[gpspaw]

I'm confused.... my refund of $1100 went to me owing $460.

[TurboTaxJeffrey]

That is unfortunate, however it does not change the reporting requirements.