So, remember last year when the Federal government introduced the Enhanced Universal Child Care Benefit? And, we were all like “Yay..free money!”.
And remember when the Federal government also reminded us that the UCCB is taxable and announced that they would be eliminating the Child Amount from our tax returns?
And, remember when I recommended that you put a portion of the UCCB into savings ’cause you were gonna need it at tax time?
No? Of course you don’t, you were distracted by free money! Totally understandable. Who doesn’t love free money?
Here’s the thing though….depending on your tax situation, you might be about to feel the hit. Here’s why:
That Child Amount that you used to be able to claim, reduced your tax bill by $338 per child. For 2015, you no longer have that credit available to you on your tax return. Add to that the fact that the Enhanced UCCB is fully taxable at your marginal tax rate, and you’ve got a double whammy.
Unfortunately, there is not much you can do about it at this point. However, if these tax changes do result in you having a balance owing, be sure to file your return on time and pay the balance by the due date to avoid interest and penalties.
And, remember, you will keep receiving the Enhanced UCCB until June 2016, which will again impact your 2016 income tax return. So, plan ahead by savings some of these funds. 20-25% is a good range for middle income earners.