Earned income for child care

[CeeCee7722]

Hi there

I've been on maternity leave in 2022 and when entering the information from my T4E, I see a spot for "Portion of the benefits considered as earned income for child care". 

Is anyone able to help me understand what this means? 

[Maggie3]

Hello CeeCee7722,

This means that if you enter an amount on that line it will be considered as your earned income and used in the calculation of child care expenses. However, you must be sure that your are eligible for child care expenses.

To confirm call Service Canada at Toll-Free: 1-800-206-7218

[malcolmanderson]

Hello. 

The "Portion of the benefits considered as earned income for child care" on your T4E refers to the portion of your maternity leave benefits that is considered as earned income for the purpose of calculating your eligibility for the Canada Child Benefit (CCB) and other income-based programs such as the Working Income Tax Benefit (WITB) or the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit.

When you are on maternity leave, you may receive Employment Insurance (EI) benefits, which include both the basic benefit and the parental benefit. The basic benefit is usually considered as taxable income, while the parental benefit is not. However, for the purpose of calculating your eligibility for the CCB and other income-based programs, a portion of your parental benefits is considered as earned income.

The amount of your parental benefits that is considered as earned income for child care purposes is equal to the lesser of the following:

• 25% of your total EI benefits received in the year (including both the basic benefit and the parental benefit), or
• The total of your childcare expenses (up to the annual limit), minus any childcare benefits you received from your employer or other sources.

You can find more information about the calculation of earned income for child care purposes on the Canada Revenue Agency (CRA) website. If you have any questions or concerns, it's always a good idea to consult with a tax professional or contact the CRA directly for assistance.