What’s the primary private quantity in Canada?
There’s a federal primary private quantity and a provincial or territorial primary private quantity. The federal quantity is $15,000 and the provincial and territorial quantities vary from $8,481 to $21,003 for 2023, relying the place you reside.
Consequently, Margaret, at the very least $8,481 of your daughter’s earnings ought to be tax-free and perhaps extra relying the place you reside. She could also be entitled to different tax credit or deductions as nicely.
Does your little one must file a tax return?
A taxpayer’s age doesn’t exempt them from submitting a tax return. So, your daughter’s earnings is her earnings and never reported in your tax return. One exception could also be when you give your daughter cash to take a position. Funding earnings like curiosity and dividends (however not capital beneficial properties) for a minor little one could also be attributed again to their mum or dad and taxable on the mum or dad’s tax return.
In case your daughter’s earnings is under the fundamental private quantity or she doesn’t in any other case owe tax due to tax credit or deductions, she could not must file a tax return. That mentioned, Margaret, there are benefits to doing so. She could have had tax withheld at supply on her earnings that may be refunded if she recordsdata a tax return that calculates she has no tax payable. She could also be entitled to sure federal or provincial tax credit or advantages which are means-tested based mostly on her earnings. She will even begin to construct her registered retirement financial savings plan (RRSP) room, as a result of employment earnings is taken into account “earned earnings” for RRSP functions.
Do you get a tax credit score for dependents?
You requested about whether or not you might declare your daughter as a dependent. There’s a tax credit score known as the quantity for an eligible dependent, which you’ll declare when you didn’t have a partner or common-law companion and lived with a low-income dependent, together with a toddler. At $12,000, your daughter’s earnings could be too excessive to qualify even when your tax submitting standing is single, divorced or widowed.
You may declare medical bills paid for a minor little one, so, when added along with your individual medical bills, they could be sufficient to qualify you for a tax refund. Medical bills must exceed a threshold based mostly in your earnings to save lots of tax.
Carryforward guidelines: Are you able to declare a toddler’s earnings in a future 12 months?
Lastly, a taxpayer should file a tax return and declare their earnings within the 12 months it’s earned. There isn’t a possibility to say the earnings in a future 12 months. Sure tax credit, deductions and losses could also be eligible for a carryforward.
In abstract, Margaret, you could not must file a tax return for a kid if their earnings is so low that they don’t owe any tax. However there could also be a bonus to submitting a tax return for a kid to qualify for tax credit and advantages in addition to to generate RRSP room.