My clients have a DTC for their child and Tax cycle automatically put it on the dads return. However its the mom who is listed as the parent of the DTC. They are all living together but CRA seems pretty specific about can actually claim the credit. Taxcycle also claimed both DTC AND Caregiver but you can only claim one?
Once the child’s DTC was approved, CRA automatically adjusted moms prior years returns. CRA would not adjust her 2023 as dad had claimed the caregiver credit. We adj/removed caregiver from dad and tried to add DTC but could not as he was the not the parent listed. So had to add DTC for that year to moms.
I can override the Taxcycle auto calculations but wondering what others experiences are for letting returns get filed with best possible refund - no matter which parent is listed on the child’s DTC?
I have successfully claimed both, the DTC and the Caregiver Tax Credit for the same individual, including filing for these claims via adjustments using RAC, and by paper returns. Note that when you look at the criteria for the Caregiver Credit and supporting documents required, it specifically states: " You do not need a signed statement from a medical practitioner if the CRA already has an approved Form T2201, Disability Tax Credit Certificate, for a specified period." CRA wouldn’t include this clause if you couldn’t claim both credits.
I just finished re-reading the rules for transferring the DTC and Caregiver credits to the parents. Either parent should be able to make the claim. The claim can also be split between both parents.
Since the return has already been filed and needs to be adjusted, the best approach would be to write a cover letter explaining the situation, identify the rules as defined by CRA and / or the ITA, and request CRA consider either both parents or the requested parent claim the transfers. The adjustment request and letter should have the same parent claim both, the Caregiver credit and the DTC. Attached the T1-ADJ for both parents so that CRA knows exactly what you are requesting. I often have the parents co-sign the cover letter and have them sign the T1-ADJ so that CRA knows they are requesting this change.
Line 31800 – Disability amount transferred from a dependant - Canada.ca
I phoned CRA to confirm their rules and was told that in order to file the DTC on the other parents return, a request had to be sent in writing to transfer the credit from one parent to the other. I have had to do this with another client as the mom does not have income. And we did send a letter with both parents signing. I don’t understand would CRA would not just put both parents on the child’s DTC to begin with - then either parent can claim where it makes the most tax sense.
And because this client was told by CRA that they were unable to claim the DTC on a prior year because the Caregiver amount was already claimed by another parent, I understood that to mean you cannot claim both. So I reversed the Caregiver claim using RAC for the Dad then added the DTC to Mom. And RAC would not let me adjust Dads return to add the DTC saying he is not listed. Very confusing.