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Tenglai
Level 1

Self Employed working from home

I have a friend who works as a self-employed nanny. In 2020, she helped her daughter take care of her children when the daughter was at work. Her daughter paid her money as a sum of salary taking care of her kids. They live in a house, but on separate storeys. My friend wonders if she can claim the salary that she received from her daughter as her income for 2020 tax return? 

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Accepted Solutions
ayseleren18
Level 4

Self Employed working from home

Thank you for choosing TurboTax,

As per CRA,  the term eligible child care provider refers to an individual or organization providing child care services. Where the child care services are provided by an individual, the individual must be a person other than:

  • the father or mother of the eligible child;
  • a supporting person of the eligible child;
  • a person in respect of whom the taxpayer or a supporting person of the eligible child has deducted a tax credit under section 118 for the year; or
  • a person who is under 18 years of age and related to the taxpayer.

 

A supporting person of an eligible child of a taxpayer for a tax year is defined in subsection 63(3) to mean an individual who resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year and who is:

  • the child's parent (paragraph 252(2)(a) provides an extended meaning of parent for the purposes of the Act);
  • the taxpayer's spouse or common-law partner; or
  • any other individual who was able to claim a tax credit under section 118 for the child for the year.

The grandmother is living in different stories from her daughter, so we can say that she is not a supporting person. Moreover,  The Canada Revenue Agency confirmed in a recent Technical Interpretation that amounts paid to grandparents could qualify as long as the expenses incurred were in respect of an eligible child and the grandparent was not being claimed as a dependent by the individual’s parent. This means that If her daughter did not claim her mother as a dependant, the grandmother should also add these amounts to her income.

View solution in original post

1 Reply
ayseleren18
Level 4

Self Employed working from home

Thank you for choosing TurboTax,

As per CRA,  the term eligible child care provider refers to an individual or organization providing child care services. Where the child care services are provided by an individual, the individual must be a person other than:

  • the father or mother of the eligible child;
  • a supporting person of the eligible child;
  • a person in respect of whom the taxpayer or a supporting person of the eligible child has deducted a tax credit under section 118 for the year; or
  • a person who is under 18 years of age and related to the taxpayer.

 

A supporting person of an eligible child of a taxpayer for a tax year is defined in subsection 63(3) to mean an individual who resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year and who is:

  • the child's parent (paragraph 252(2)(a) provides an extended meaning of parent for the purposes of the Act);
  • the taxpayer's spouse or common-law partner; or
  • any other individual who was able to claim a tax credit under section 118 for the child for the year.

The grandmother is living in different stories from her daughter, so we can say that she is not a supporting person. Moreover,  The Canada Revenue Agency confirmed in a recent Technical Interpretation that amounts paid to grandparents could qualify as long as the expenses incurred were in respect of an eligible child and the grandparent was not being claimed as a dependent by the individual’s parent. This means that If her daughter did not claim her mother as a dependant, the grandmother should also add these amounts to her income.

View solution in original post

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