For those with kids that participate in different physical activities, you’ll want to take advantage of the children’s fitness tax credit.
The tax credit was established in 2006 (implemented in 2007) by the government to encourage families to live healthy, active lives. In fall 2014 the federal government announced it would double the amount of the tax credit from $500 to $1,000 per child. While it’s a move that has obvious political motives, it will help families juggle the increasing costs of raising a child.
Qualifying for the Credit
In order to be eligible for the credit, the chid must be under 16 years old (18 years if disabled) at the beginning of the tax year. This means if you are filing a tax return for 2014, the chid must be under 16 at the beginning of 2014.
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The children must be involved in a “prescribed program of physical activity.” So, what the heck is that?
Basically it is any physical activity that is:
- ongoing in nature (at least 8 straight weeks or 5 straight days for children’s camps)
- supervised by adults
- geared towards children
- requires significant physical activity involving cardio and either muscular strength, endurance, flexibility or balance
Physical activities that are eligible: soccer, basketball, golf, horseback riding, football, baseball, etc.
Physical activities that are not eligible: any activity where motorized vehicles make up the majority of the activity, various costs relates to the activity (travel, room, board, etc), unsupervised activities or regular school programs.
Programs comprised of multiple activities (ie. day camps) must have at least 50% of daily physical activities.
The tax credit is calculated using the lowest current federal tax rate (15%) and the most a family can receive is $150 per child. It may not seem like a lot, but for families with several (active) kids it can start to add up over the years and helps with the rising costs of kids activities.
The savings are based on 15% and are as follows:
|Amount Paid||Total Credit|
Other Things to Note
The tax credit is refundable beginning in 2015 (and subsequent tax years). When a credit is refundable it means that families of any income can benefit from it. When a credit is non-refundable, income must be at a certain threshold in order for the credit to be of any benefit.
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Also, the credit isn’t indexed for inflation. Unlike other tax credits that are indexed every year, this one isn’t – and will likely stay at the current amount unless the government decides to change it.
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Either spouse can claim the credit but if an amount paid would qualify as both a child care expense and fitness credit, the child care expense must be claimed first and the unused part can then be claimed as a fitness credit. If you are doing your tax return using a program like UFile, it should automatically pick this up and isn’t something you should have to manually figure out.
Also, the credit cannot be carried forward to future years, so make sure you claim it for the year the costs were paid.
The credit is claimed on line 365 of the federal return. For more information, click here.
Conclusion: although relatively small, the children’s fitness tax credit will make an impact in 2015 and subsequent years since it has now been doubled. The maximum credit is $150 per child (per year) and the costs must be for a prescribed program of physical activity.
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