Kiersten and Greg are married and they have two children, aged 2 and 5. They pay a babysitter $150 per week to take care of their children for 48 weeks each year. Kiersten works full time and earns a salary of $90,000 per year. Greg works part time, earning a salary of $28,000 per year. He also attends a Canadian university part time during the fall semester for a total of 17 weeks, or 4 months, each year. Required: Can Kiersten or Greg deduct child care expenses on their tax returns for the year? On whose return should the deduction be claimed? What is the maximum amount of child care expenses that can be deducted?

Solution: Yes, child care deduction is available because Kiersten and Gregs children are eligible children under the ITA and the child care costs are incurred so that both parents can earn income. Greg would be able to deduct child care expenses for the portion of year that he is not in school.

Kiersten can deduct the child care expenses while Greg is in school. Kiersten's Deduction (higher income earner): Is the least of:

Greg's Deduction (lower income earner): Is the least of: