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Divorce & Family Law This forum is for discussing any of the legal issues involved in your divorce.

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Old 03-16-2006, 05:10 PM
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Default Daycare/Support/Tax Question

Hi there...I have a general question. If support is paid, along with and additional amount towards daycare..paid as a total to the mother and not to the daycare facility, can the daycare portion be used as an expense on taxes?

As well, if the seperation agreement states that the mother will claim the daycare, is that really applicable for tax purposes?? (there is no communication between father and mother, so cooperation is not likely).

Thank you!!
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Old 03-17-2006, 03:45 PM
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I'm not an accountant, but my understanding is that the person who actually pays the day care expense is the one who takes the deduction on their income taxes.

So, if mom pays the daycare and dad reimburses mom for this, then mom would be the one to take the tax deduction. Dad wouldn't get a tax deduction for the portion of the support that related to daycare.

However, in calculating how much dad should reimburse mom, the tax benefits for mom should be taken into account. Right now, you can make a deduction of up to $7,000 per year per child for daycare expenses.
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Old 03-17-2006, 06:13 PM
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Jeff,

OK so one spouse pay the daycare and gets the tax credit at the end of the year. Where in the guidelines is there mention about daycare or section 7 expenses being offset to the other spouse based on the fact that the other spouse is taking advangtage of the tax credit?

Is there a said formula that one can use to determine what the paying spouse should pay when taking the tax credit into account?

As far as I was aware is was based as a % of the incomes?

As well, it may be advantageous for the higer paying spouse to strike a deal with the other spouse to take the tax credits to reduce his income to a lower tax bracket?

Come on, I wanna hear from some accountants out there ... I know your out there!

Hubby

Last edited by hubby; 03-18-2006 at 11:12 PM.
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Old 03-20-2006, 07:57 PM
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Hubby I am not an accountant but you can't choose who claims the benefit

From CRA
5. I have recently separated from my ex-spouse and because my family income is much lower, I would receive a greater amount of benefits if I were the sole recipient. Why is this no longer possible?
By letting individuals pick and choose who between them will be the eligible individual, the CRA is not being fair to all of its other benefit clients. If a child lived with one individual only, that individual would be the eligible individual (assuming all of the other eligibility criteria have been met) without regard to that person's family income. If a child resides with two individuals, and they are both responsible for that child's care and upbringing, it is most fair and equitable if both share benefit eligibility for that child, regardless of the amount of the benefit, if any, that each will receive. It is entirely possible in a situation of shared eligibility, that one individual will receive no benefits at all during their six-month rotation, due to their high family income
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