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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 07-11-2017, 02:23 PM
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Default After Tax Value for extracurricular activities

Hi all,

I am paying for childcare. My ex has to pay his part and he is calculating his share based on "after tax value" and then based on our incomes.
Can't figure out why "after tax value"? Thank you!
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Old 07-11-2017, 03:08 PM
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Its called "net cost". One parent received the tax benefits which are to be applied to the activity to determine the other parents cost. Its easier to subtract the tax benefit from the cost and then determine proportionate share.

For instance, daycare costs $2000 per year--tax benefit is $500--amount to split proportionate to income would then be $1500.
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Old 07-11-2017, 03:16 PM
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Thank you!
So if I pay for hockey $1700 and I will get the $500 child sport benefits on the end of the year - the amount we have to share is 1200?
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Old 07-11-2017, 03:41 PM
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Yes thats how its done. Unless there are other credits too.

This works for child care, medical and education costs too. Anywhere there is a tax credit, you are obligated to take it off the cost and then split from there.

The reasoning is that in an intact family, both parents are eligible for the tax credit by filing together. When you divorce only one parent is eligible or the benefits each year.
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Old 07-11-2017, 05:18 PM
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I have reason to believe my ex wife's husband claimed the sports tax credits over the past few years. It certainly isn't on her income tax returns.

How do you go about finding out what they received to figure out my share?
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Old 07-11-2017, 05:20 PM
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Also braces....we have spent nearly $10,000 on 2 kids in the past year...surely sh got money back for those during tax time? I wouldn't know cause she does not provide me with her returns.
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Old 07-11-2017, 08:23 PM
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There you should be telling her you want copies of her taxes before you agree to any expenses or determine your proportionate share. OR you do a fake return yourself with the info you have (her income--make the other stuff up) and see what you get. OR you add the expenses to your return and see what you get and tell her without disclosure you determine the tax benefit to be x amount and calculate it that way.

Unless she makes less than $50000 a year the medical expenses after benefits coverage need to be over $1500. If you dont have coverage then it will work but most benefits companies pay about $2000-4000 per kid.
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Old 07-11-2017, 08:28 PM
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Thank you for the info re: tax credits.
Next question - my ex has submitted daycare expenses to me (itemized monthly), and then states "The after-tax value of the costs paid is 0.65 per 1.00....". I am being asked to pay my proportionate share of the "after-tax" calculated value.
I do not understand what this "after-tax value" means. On the surface, it seems "good" because it is reducing the costs that are being assigned to me, but I would like to understand how/why it is being calculated in the first place.
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Old 07-11-2017, 08:46 PM
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Quote:
Originally Posted by rockscan View Post
There you should be telling her you want copies of her taxes before you agree to any expenses or determine your proportionate share. OR you do a fake return yourself with the info you have (her income--make the other stuff up) and see what you get. OR you add the expenses to your return and see what you get and tell her without disclosure you determine the tax benefit to be x amount and calculate it that way.

Unless she makes less than $50000 a year the medical expenses after benefits coverage need to be over $1500. If you dont have coverage then it will work but most benefits companies pay about $2000-4000 per kid.
My ex and her spouse don't even make $50,000 combined. Far as I know she makes 10,000 a yr disability. And in prior years only made ~$20,000 working part time.

I have seen her past tax returns through this latest motion disclosure there are no tax deductions for any sports for any of the kids or medical. That's why I believe her husband claimed them. Also haven't seen her 2016 return she failed to provide it in disclosure or to give them to me before June 30 so don't know if she claimed braces yet.
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Old 07-11-2017, 09:08 PM
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Quote:
Originally Posted by almostdivorced2017 View Post
Thank you for the info re: tax credits.
Next question - my ex has submitted daycare expenses to me (itemized monthly), and then states "The after-tax value of the costs paid is 0.65 per 1.00....". I am being asked to pay my proportionate share of the "after-tax" calculated value.
I do not understand what this "after-tax value" means. On the surface, it seems "good" because it is reducing the costs that are being assigned to me, but I would like to understand how/why it is being calculated in the first place.


Who gets the tax benefit? Is your proportionate share 65%?
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