Dependant and CCB

Can the CCB calculations be edited to exclude children born after a taxation year as appropriate?

A client informed us that they had a baby in 2021. We’re doing a 2019 return for them, if we add the child’s birthdate the DEP says at Dec 31, the child was -2, but they’re still being included in the CCB calculation. This means we can’t add the child on until the 2021 return or the calculation of the CCB due to them for that year will be incorrect.

Thanks!

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“A client informed us that they had a baby in 2021. We’re doing a 2019 return for them”

I don’t see why it would not be appropriate to use 2019 facts for a 2019 tax return.

Certainly, when I was preparing 2020 T1s, I was not including 2022 and 2023 income figures in them, nor anticipating future 2022 marriages or 2030 divorces …

Or perhaps I am missing something?

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I think the problem is because you entered the baby in the software. Don’t include the new dependant. Make a note in your own files to include when filing the 2021 return, but don’t put in the software prematurely. Hope this helps.

@joe.justjoe1 if you’re missing something it’s because my post was poorly worded!

We made a note in our workflow system and I also added a memo on the DEP tab that’ll carry forward so we can pick it up in the appropriate year. Ignore the 2019 and 2021 comments I made…

Consider if the client moves after the return has been filed; there’s a section on the Engagement tab to add their address for next year’s engagement. This is a placeholder where information can be added that is irrelevant to the return that we filed and won’t affect the return as filed.

Similarly, if a client has a baby after the return has been filed, it would be good to be able to add the new dependent in Taxcycle and know that it won’t change the return. Obviously, the memo I created will do the trick, I was just suggesting this as an added option.

On the Dependant worksheet, under “Information about credits to claim”, change “Count for CCB and GST credits” to No. That will allow you to print the correct CCB and GST calculations. After printing the return, remember to change the setting back to Yes.

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Thank you @daniel for giving the only helpful answer

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@dklasdencga

Note: You would definitely NOT do as daniel suggested if it was a 2021 baby and a 2019 tax return. (The original question)

In 2019 there exists NO dependent at all, and thus would be fictitious and irrelevant to enter a non-existent dependant, and creates a large opportunity for incorrect tax calculations.
The DEP entry in 2019 should reflect the actual reality in 2019, all the actual reality in 2019, and nothing but the actual reality in 2019. I am surprised that anyone would want to consider anything different.

Joe the point of the question is to make a note in the return that there will be a new kid to add as a dependent in 2021. I do it all the time even if the kid isn’t out of the womb yet. I don’t enter a birthdate but add a carry forward message in the birthdate field, this ensures no calculations are made on the current return.

Personally, I would never ever consider entering “fictions” of any sort into a tax return for a year.

Professional accountants are required to keep proper client records in their working papers, and there, IMHO, is where such information belongs.

Perhaps the lesson of the question/thread should instead be:
“Do not enter fictitious dependants into tax preparation software in order to avoid unpredictable results”…

@joe.justjoe1,

For what it’s worth, TaxCycle does not include a dependent born in 2021 when calculating tax credits for a 2019 return. However, it will include that dependent in the CCB calculations. It is because of this software quirk that I suggested what I did. Entering the dependent as I suggested does not result in any incorrect calculations, thanks to the foresight of the TaxCycle software designers.

Having said that, I can appreciate your point about keeping this type of information off the tax return. Nothing can be incorrectly included in tax calculations if it is not incorrectly entered on the tax return.

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@daniel thanks for that information. I will note that.

@joe.justjoe1 Perhaps the lesson of this thread should be that @joe.justjoe1 does not hold a monopoly on answers that serve the purpose of this forum. I think the vast majority of us realize that you post some very appropriate responses, but the last word should not necessarily always be yours.

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"For what it’s worth, TaxCycle does not include a dependent born in 2021 when calculating tax credits for a 2019 return. "

.
I am pleased to hear that not only is taxcycle more ethical than some of its users, but is more law abiding and correct as well. :innocent:

@joe.justjoe1 - if you bothered to actually read daniel’s response, he gave the software answer as to how to not include the child in the CCB calculation and not forget to add the child when the proper year comes around, which is what the OP asked for. Could he wait and add the child on the proper year? Of course. But most preparers are now paperless and notes in files are a thing of the past.

And when you want to attack a person using the @ symbol, select the name that pops up so the spelling is correct.

Obviously I was referring to electronic accountants working papers. However, professional accountants would still be in compliance with their public practice rules if they kept paper ones

If keeping none, as you seem to imply some do, hopefully they would be disciplined at their next public practice inspection review.

It is not the function of tax preparation software to attempt be a substitute for a CPA degree. A scalpel never pretends to be able to do without the brain surgeon’s skill who guides it

@joe.justjoe1 Since when do we have to have a CPA licence to file income tax or use tax software? Show me that link, please.

Clients are free to apply the “caveat emptor” principle, whether choosing licenced or unlicensed doctors, lawyers, accountants, plumbers, electicians, or whatever.

@joe.justjoe1 Thanks for admitting that; and Tax Cycle does not insist that we should all be CPAs to use their software. Why then all the harping about brain surgeons? My clients have exercised that option for some reason.

Again, with caveat emptor, your informed clients know who they have and have not hired, and are happy with that in their circumstances.