Individual married but is the higher income earner she is natural parent of son. Her husband filed for bankruptcy with low income. Can she claim the child care expenses?

Answer

The child care expenses must be claimed by the spouse with the lower net income unless specific situations applied during the tax year.  Bankruptcy is not one of those situations.

Please see this TurboTax FAQ for more information on transferring child care expenses to the spouse with the higher net income:

The CRA normally requires childcare expenses to be claimed by the spouse or common-law partner with the lower net income. However, the spouse or common-law partner with the higher net income may claim the expenses if one or more of the following conditions is met during the tax year:

  • The supporting person with the lower net income attended school part-time or full-time;
  • The supporting person with the lower net income was incapable of caring for children because of a mental or physical infirmity;
  • The supporting person with the lower net income was in prison for at least two weeks;
  • You were separated from your spouse or common-law partner for at least 90 days due to a breakdown in your relationship.

To claim childcare expenses on the return of the spouse with the higher net income:

If you're using the CD/Download version of TurboTax

EasyStep interview:

  1. If you’re preparing your returns together, enter your spouse’s income information in the Profile section of the interview, under Personal tax profile. If you’re preparing your returns separately, enter your spouse’s income information in the Introduction section of the interview, at Name, info about your spouse or partner.
  2. Under the Introduction menu, select Dependants. Select Yes at Did you pay for someone to look after your child so you could earn income, go to school, or conduct research.
  3. Open the Deductions & Credits section of the interview and select Child care profile.
  4. If you’re preparing your returns together, select whether the spouse with the higher net income is eligible to claim the childcare expenses. If you’re preparing separate returns, select whether you are the spouse with the higher net income.
  5. On the subsequent screen, select all the CRA exceptions that applied in the tax year and then select Continue. If any exceptions applied, the childcare expenses will be claimed on the return of the spouse with the higher net income.

Forms method:

  1. If you’re preparing your returns together, at the bottom of your screen, select the Forms or T-Slips button next to your spouse’s name. Then, select your spouse’s income form or slip (for example, T4) and enter their income information. If you’re preparing separate returns, enter your spouse’s income information on your T1 General, at Information about your spouse or common-law partner.
  2. Each spouse must complete and file a form T778.
    • If you’re preparing your returns together, at the bottom of your screen, select the Forms button next to your name. Then, select Form Lookup. Type “t778” into the search field and select T778 from the options that appear. Enter your information. Repeat this step for your spouse.
    • If you’re preparing your returns separately, open the Forms menu at the top of your screen and type “t778” into the search field. Select T778 from the options that appear. Enter your information into the form, as required. If you’re the higher income spouse, complete Part C.

Note: The spouse with the higher net income must complete part C. If any exceptions applied, the childcare expenses will be claimed on the return of the spouse with the higher net income.

If you're using TurboTax Online

  1. If you’re preparing your returns together, enter your spouse’s income information in the Income section of the interview. If you’re preparing separate returns, enter your spouse’s personal and income information in the Setting up section of the interview, under Intro.
  2. Open the Setting up menu at the top of your screen and select Intro. In the Dependants section, select Yes at Did you pay someone to look after your child so you could earn income, go to school, or conduct research.
  3. Open the Deductions menu and select Child Care Expenses. If you’re preparing your returns together, select whether the spouse with the higher net income is eligible to claim childcare expenses. Then, follow the prompts on the screen to select the spouse with the higher net income. If you’re preparing separate returns, select whether you have the higher net income.
  4. On the subsequent screen, select all the CRA exceptions that applied in the tax year, and then select Continue. If any exceptions applied, the childcare expenses will be claimed on the return of the spouse with the higher net income.

If you're using TurboTax Free

  1. If you’re preparing your returns together, enter your spouse’s income information by selecting their return at the top of your screen. Select Your Taxes and type their income form or slip into the search field (for example, “t4”). Select their form or slip and enter their income. If you’re preparing your returns separately, on the Your Taxes screen, type “spouse” into the search field. Select Spouse: Personal information, and enter your spouse’s information.
  2. On the Your Taxes screen, type “t778” into the search field. Select T778: Child care expenses deduction from the options that appear.
  3. On the subsequent screen, follow the prompts to enter your information. Each spouse must complete and file a form T778.
    • If you’re preparing your returns together, if you’re the spouse with the higher net income, select whether any of the CRA’s exceptions applied during the tax year. If any exceptions applied, the childcare expenses will be claimed on the return of the spouse with the higher net income. If you’re the spouse with lower net income, enter the amount of expenses claimed by the higher income spouse. Repeat steps 2 and 3 for your spouse. 
    • If you’re preparing your returns separately, follow the prompts on the screen to enter your information.

Related information


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