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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 03-29-2006, 09:06 PM
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Quote:
Originally Posted by Duped
I was just talking with a nice lady at the CRA concerning who can claim child on taxes as dependant or equivelent to spouse.

The rule is that only one of the parents can make a claim for the child on their taxes in a given tax year.

If both claim, both are denied the claim.

Duped
I'm no accountant, but my understanding is that denying the claim for both spouses is just the CRA's way to handle this administratively. One of the spouses is going to be entitled to the claim, and if it's you, you can get this re-assessed.
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Old 03-29-2006, 09:23 PM
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Default Child Tax Benefit & Eligible Dependent Credit

In short, the child tax benefit is paid to the parent who has primary residence. Where there's shared custody, the parties need to agree between themselves how the child tax benefit is to be shared. If there's no agreement, the CRA decides which parent receives the CTB.


You can claim the eligible dependent credit (formerly equivalent to spouse credit) if you're single and supporting a child who is living with you. The child support recipient is the one who claims this (payors can't claim it). In situations where no child support is being paid, usually each parent can claim a separate child.
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Old 03-30-2006, 11:25 AM
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Quote:
Originally Posted by DadofTwoGirls
If you look at the following link:

http://www.cra-arc.gc.ca/tax/individ...uations-e.html

It seems to indicate that a person can't make a claim for an eligible dependant if support payments are made to another person for that dependant.

If I have equal/shared custody of two kids, can I make a claim for an eligible dependant for one of the girls? I did that last year and it went through. I also made the claim this year. I pay child support based on guideline amounts.
The only reason I can see for them allowing it to go through is that the 'marital' status may not have been reflected properly at CRA? Need to fill RC65 form ... that can be the only reason I can think of why CRA would allow it.

Hubby

Last edited by hubby; 03-30-2006 at 11:31 AM.
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Old 03-31-2006, 09:55 AM
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Default Child Tax Credit - Spousal Support and Daycare expenses ...

Quote:
Originally Posted by hubby
Jeff had written ...

"Claiming the Canada Child Tax Benefit
The person who is mainly responsible for the care and upbringing of a child is able to claim the Canada Child Tax Benefit. In cases of shared custody, each parent is normally entitled to receive the benefit for 6 months of the year.

Claiming the Equivalent to Spouse Credit
You may be able to claim an equivalent to spouse credit for one of your children, if you were responsible for supporting the child."
Apparently, if one spouse gets in the seperation agreement that they have 'soul' custody of one of two or more children, they can

1. Claim that child as a dependant and as such claim the spousal credit of 7000.

2. They are able to also claim a % of the Daycare expenses.

3. They are also albe to claim the CTB for that child as well.

Many times spouses are reluctent to this cause they are in essance loosing out the money that would go to them if they had soul or shared custody of ALL children.

What you can do is offer to give a little more support to offset their lose and in essance gives you entitlement to spousal and child credits.

This is how my friend explained it to me ...

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Old 04-05-2006, 04:04 PM
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Jeff is correct. If you pay support, you must not claim the eligible dependent (formerly known as equivalent to spouse), even with 50-50. This one really p*sses me off. One law says you must pay support, and another law says you do not get the deduction because you pay support. Joseph Heller would have a field day with this. To get the deduction, you must prove you have children. To prove you have children, you pay support. But paying support negates the deduction. The deduction gives you a refund to help pay support. No refund, no support, therefore no children. Therefore you get the deduction. Repeat.

Also, you may not make the claim if you re-marry or common-law. There are more rules on this on the CRA web site. There is also a little yes/no wizard that can guide you through the process.
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Old 04-05-2006, 04:32 PM
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DD,

My understanding is that the only way to be eligable for the Equiv. to spousal support is to have at least ONE child become a dependant of yours ...

So if you had 2 children and one was depedant on the ex spouse and the other on you, irregardless of you are the payor to the other child which is under the care of your ex spouse ... you WOULD be eligable to claim that spousal credit via your dependant child.

Again, thats if the ex spouse agrees to such conditions to benefit the family as a whole when it comes to tax benefits.

Hubby
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Old 04-06-2006, 01:48 PM
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I've done some reading on the dependant amount claim (formerly equivalent to spouse amount). It does seem that I will not be able to make the claim but it has made it through this year and I have my refund cheque.

I claim one child as a dependant and the ex claims the other one. I suppose it might catch up with me if there is a more thorough review.

I agree with DD. This rule is absurd in cases of shared custody. The 50/50 situations seem to be treated by the tax laws - and other laws - as an aside or special case more than anything else. It's like they craft their laws based on the statistically more prevalent case where mom has custody and dad pays support and then briefly consider the other situations.

In the case of 50/50, I am actually penalized for being a responsible parent and providing a home for my kids including a house, bedrooms, clothes, food, toys and everything else I need to provide.

I see no reason why I shouldn't be able to claim the dependant amount simply because I pay support. Claiming the dependant amount has absolutely no effect on the financial situation in the ex's house. What it does do is limit my ability to care and provide for my kids.

In my case, from a financial point of view, I would be better off if the kids were at their mom's full time and I became a weekend dad only providing candy and ice cream.

I refuse to do this but I am frustrated.

Does anyone want to join me in a fight to change this rule?
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Old 04-06-2006, 03:39 PM
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I would love to be a fly on the wall at the legislative building when they scripts these laws...

Fred: Hey Bob, we are going to change equivalent to spouse to eligible dependents. Yah know, to avoid confusion. Might as well clean of the legislation while we are at it.
Bob: Hey. Good idea. Basically dependents are people that do not contribute, but are dependent on the bill payer/primary bread winner to live. So that could mean spouses or children. Let's go!
Fred. Yes. It would be nice to give that family a break. And those single people taking care of dependents are at a real disadvantage. Like if their husband or wife dies. Man, lets give them a break.
Bob: I like it. They have a lot of extra costs that are forced on them. Like daycare for example. I mean, they must shoulder that entire costs. And other things. So it would be nice to give them a bit of a tax break. I mean they don't have that other spouse to help out.
Fred: Yeah. Lets give them a break. So; intact families get a break. Check! And widows and widowers. Check!
Bob: Check! Check!
Fred: Hey... what about those wacky divorced folks.
Bob: Well, they chose to be divorced. Screw 'em.
Fred: Hey, that's not fair. Okay we have to give them something. Hmmm... think think think. I know! We will give them the eligible dependent deduction too.
* high fives all around *
Bob: Wait wait wait... who gets it?
Fred: Get's what?
Bob: The deduction? The husband or the wife?
Fred: The wife. She has the children.
Bob: ummm... But what about joint custody?
Fred: What?
Bob: Joint custody. Where the parents have the children equally. I think they call it joint access or shared parenting.
Fred: Like that is going to ever happen.
Bob: But lets say it does happen. Like 3 times out of 100. What do we do.
Fred: hmmm... we don't want to annoy intact families, or widows or widowers... therefore we can only give it to one family. But who?
Bob: Yeah, how do we determine which is the "family"?
Fred: Oh... um... how about... the one who has the children.
Bob: But, how will we know who has the children?
Fred: I see what you mean. There couild be a slim chance the wife does not have the children. hmmmm... we could use court orders, or custody terms, yah, put it into terms they use.
Bob: No. We would have to verify this. Or create a NEW form or something. We have too many forms as it is. No new forms.
Fred: oh oh oh ... how about... who ever pays obviously does not have the children. We track payments.
*checks sign on door*
Fred: Yup. We are Revenue Canada. We do revenue. Not court order verification. So if they enter a support amount on a line 175 thay obvisouly do not have the children jointly.
Bob: But couldn't they just check a box or something? Like a) sole custody b joint custody?
Fred: We are R-e-v-e-n-u-e C-a-n-a-d-a- Bob. Not C-h-e-c-k- B-o-x Canada Bob! If you pay support, you are obvisously not responsible for that child.
BoB: That seams to simple. We should really look into this.
Fred: Wow. I don't want to have to get all complicated. We were supposed to make this easier. And we just came up with this nifty way of determining who has the children. I say just leave it alone.
Bob: But this doesn't make sense. In intact, widow and widower families, we give a credit to the payer since they are taking care of the dependents. But with this method, it is other person that gets the credit.
Fed: Oh that reminds me. Speaking of families. If a person remarries, they also cannot claim the deduction.
Bob: So let me get this straight. The person paying, although single with children like a widow or widower, does not get the deduction. And if that person remarries, like the original family, does not get the deduction if eligible. From a financial perspective, we have a double standard. For one set of people, it is the primiary bread winner who gets the deduction, yet for divorced people, it is the recipient is gets the deduction. And the deductible dependent relies on the paying parent to live. Actually to the paying parent, both are dependents! Can't we at least split it or make the refund prorated based on incomes?
Fed: Now you are talking crazy man! Imagine the forms and record keeping. Oh, and btw, we removed the tax deduction for support payments.
Bob: Oh yeah. Check.
Fred: Check.
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Old 04-06-2006, 03:55 PM
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Quote:
Originally Posted by DadofTwoGirls
I agree with DD. This rule is absurd in cases of shared custody. The 50/50 situations seem to be treated by the tax laws - and other laws - as an aside or special case more than anything else. It's like they craft their laws based on the statistically more prevalent case where mom has custody and dad pays support and then briefly consider the other situations.
In the case of 50/50, I am actually penalized for being a responsible parent and providing a home for my kids including a house, bedrooms, clothes, food, toys and everything else I need to provide.
DadofTwoGirls,

I have stated, on several times, that it is cheaper for the me to abandon my child than to be an active parent. If I abandoned my children my stress level would probably drop to zero. Several times I thought "Screw this, I could pay full support, and retire in the Bahamas." And man, would it also screw my ex over since a) she wouldn't have someone handy to dump the child on when she needs to at a moments notice, b) actually have to get all the school information, etc herself c) take the child every time to and from, but not limited to: lessons, activities, sports events, concerts, parties, etc, c) she would have to go to church (or pull the child out of Sunday School...). And so on. She would be all alone. And then she can actually rightfully claim to be a single parent. Well, not actually, because true single parents do not get $500 per month... tax free, plus deductions after deduction.

My latest estimate is that I would save over $1000 per month without having my child with me 50% of the time. And that is with paying full child support and paying my share of section 7. Yup, a $1000. And I would not have $1000's in legal fees. And the headaches.

I would a buy a round of beers for every man that puts up with the huge levels of support, double dipping of day-to-day expenses and BS with no relief from anything. Funny how I am responsible for my life and my children's and oddly my ex, but she is not. She can work. Not work. Put the kid in daycare. Or not. Do whatever. And I am responsible for her choices. And she gets the deductions. And can write off legal fees, and on and on and on...

And should a man remarry and have children, god help him and his new wife. The children will become second class citizens. And if the mother re-marries. Yeah kids, your getting an inground swimming pool.

That beach is looking mighty tempting.
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Old 04-06-2006, 10:50 PM
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Dadof2girls: Although you claimed 1 child as a dependant on your income tax, and you pay child support(regardless of how much time your girls are with you), I don't think you can claim a dependant. A person can't make a claim for an eligible dependant if support payments are made to another person for that dependant, I was told by CRA agent.

My ex notified CRA, and I had to repay back the child tax benefit too.
I also had equal/shared custody of two kids? I also pay child support based on guideline amounts.

Be careful before you do it, so you don't end up paying back the tax man.
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