How Mrs. Hutch Sticks it to the Taxman

Any parent will tell you that raising children is the hardest job in the world. Any parent who isn’t medicated, anyway. And it’s true, you put up with a lot.  Sure you get to enjoy the world’s sweetest slobbery kisses, but those kisses only go so far. That smear of shit on the wall still isn’t going to clean itself, you know what I mean?

But there is one big fat juicy reward that goes with parenting: tax breaks. Mr. Hutch and I pay an honest-to-god saint to take care of the Hutchlings so that we can work at apparently more important jobs. We gladly hand them over to her with $65 every weekday (we get a $5 break per day because there are two of them – totally makes carrying two babies at once worth it).  $65 a day, 5 days a week, 48 weeks of the year, plus a $200 deposit for the remaining four weeks, works out to nearly $16,000. Ouch. But, because of some previous government’s infinite wisdom, those 16 Gs are tax deductible in Canada. Assuming a marginal tax rate of 29.7%, we’d get $4752 back on our tax return. That is, if we were stupid.

You see, I’d rather not give the government my money in the first place only to have them return it to me, interest-free, next April. I have better things to do with it right now. Luckily, there is a way to do just that. The Canada Revenue Agency will allow you to not have the income tax withheld from your paycheque on the amount of your tax-deductions. In the Hutch family, this means RRSP contributions as well as child care expenses (we just stick with these two and don’t factor in other minor deductions like tools for Mr. Hutch or charitable contributions). If you or your employer contribute to a pension plan, they essentially do this already.

It’s called the T1213 Request to Reduce Tax Deductions at Source for Year(s) ____. Print it from the CRA’s website and mail it in. If you can’t print for some reason they’ll even mail you a few copies if you ask. Once your request is approved, you’ll get a letter instructing your employer to stop withholding income tax on whatever amount is warranted in your situation. 

Since we started doing this my bi-weekly paycheques increased by a couple hundred bucks. Pretty sweet, if you ask me. And it makes that monthly cheque to the daycare a bit easier to swallow knowing that my "refund" is already in the bank. And it's not going anywhere until I say so.