Looking for work? Here’s a tax trap
Most people know that, for income tax purposes, a parent can deduct the cost of a babysitter or nanny for the care of the children while he or she works. In most cases, the lower-income earner claims the deduction.
In fact, you can claim child-care costs if you earn income from self-employment as well as employment, attend school either full-time or part-time, or carry on research for which a grant was received.
But did you know that if you are receiving Employment Insurance benefits, you cannot deduct the costs of child care while you are out job hunting? EI benefits don't qualify as "earned income” for child-care deductions. So, you are out of luck; that's often an unpleasant surprise at tax-filing time.
Discuss taking child-care deductions with your advisors: receipts are required as the claims are often audited, but first ensure your family qualifies for the claim on Form T778.