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What is the Children’s Art Tax Credit (CATC)?

This is a new tax credit available starting in the 2011 tax year. It works pretty much the same as the Children’s Fitness Tax Credit, in that you can claim up to $500 on Schedule 1 of your tax return for eligible program costs.

Whooee! I get $500 to let my kid finger paint?

Not quite. This is a “non-refundable Tax Credit” which means it goes on your federal tax schedule and the amount you claim is multiplied by the lowest federal tax rate (15% at this point in time). So if you have $500 in finger painting classes, your taxes owing will be reduced by $75 ($500 X .15).

The politicians like to throw around that $500 figure, but the bottom line is: you spend $500 and you’ll get $75 back in the form of a tax refund. (Note: it’s a “non-refundable” tax credit, which means if you don’t pay any tax in the first place, you will get nothing back.)

Go here for all the messy details.

 

What programs are eligible for the CATC?

To be eligible, a program must be supervised and suitable for children. Eligible programs include:

  • a weekly program of a minimum eight consecutive weeks duration in which a minimum of 90% of all the activities are eligible activities;
  • a program of a minimum five consecutive days duration in which more than 50% of the daily activities are eligible activities;
  • a program of a minimum eight consecutive weeks duration offered to children by a club, association or similar organization offering a variety of different activities when more than 50% of the activities offered are eligible activities or more than 50% of the time scheduled for activities offered to children is for activities that are eligible activities (if both 50% tests are not met, a prorated portion of the fees will be allowed, representing the percentage of eligible activities offered by the organization or the percentage of time scheduled for these activities by the organization); and
  • a membership of a minimum eight consecutive weeks duration in an organization if more than 50% of all the activities offered to children by the organization are eligible activities (if the 50% test is not met, a prorated portion of the fees will be allowed, representing the percentage of eligible activities offered to children by the organization).

A program that is part of a school curriculum will be ineligible.


 

 

August 31, 2011 - Posted by | Personal Tax, Random Questions | , ,

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