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-   -   Help with child care calculation (http://www.ottawadivorce.com/forum/f5/help-child-care-calculation-20248/)

DGES 08-20-2016 01:16 PM

Help with child care calculation
 
Hello,
First time posting here. I was recently told about this site and found it extremely helpful. However, I have not been able to find information that deals specifically to my issue.

The problem arises in that my Ex and I are disputing how much I am supposed to pay for child care.
I purchased the MySupportCalculator.ca software to mimic the DivorceMate software used at my lawyers. It has been very easy to use and straight forward.
So, I believe the problem lies in the fact that the child care expenses have changed as my son is now old enough for a lower priced level of care this year. As a result each child is $420/month for a total of $10080.00 per year. The software calculator asks for the entry from her tax return for child care deduction which was based on last year's rate which was a bit higher for my son ($472) then my daughter ($420).
There was a post similar to this where a member here had said that the amount paid is based on actual costs going forward and the proportion of costs comes from the most recent tax return, which has the income from last year. So, it was my understanding that I would be paying for this year's child care using last year's income ratio. Assuming that is correct am I supposed to put in the child care tax deduction that she put on line 214 of her T1 General return into the calculator or do I put in what the projected deduction would be?

Basically, if the reduction in child care costs is what I believe the confusion is from. Do I pay for existing child care after we exchange taxes or do I pay for last year's child care to coincide with her deduction she claimed based on last year's rates. My question to that is then when my kids finish day care does that mean I still lag behind a year and pay for day care for a year after they are no longer in it?

If it helps these are the numbers:

Children:
10 years
6 years
Both live with Ex

My income: $75854

Her Income:$94720

Children Special Expense:
Child Care Expenses
Paid to Provider: (do I enter this year's estimated $10080 or last year's $10692?)
Claimed on Tax Return (Line 214 or her 2015 Tax return): $10692

Rioe 08-20-2016 04:19 PM

Quote:

Originally Posted by DGES (Post 210627)
Both live with Ex

My income: $75854

Her Income:$94720

Children Special Expense:
Child Care Expenses
Paid to Provider: (do I enter this year's estimated $10080 or last year's $10692?)
Claimed on Tax Return (Line 214 or her 2015 Tax return): $10692

Your section 7 percentages are 55% vs 45%.

So during the 2015 year, she's paid 55% of $10692 which is $5880.60 and you've paid the other $4811.40.

Now she does her taxes for 2015 and claims the full $10692 (because the children live with her). Her refund is X.

She does her taxes a pretend second time, not claiming anything in child care. Say her refund would only have been Y without it.

So claiming child care makes a difference of X-Y in taxes for her. She pays you 45% of X-Y to square things up for last year. The hard part is often getting the money from the ex.

Now you compare your line 150 incomes (probably) and calculate a new section 7 proportion for next year. And next year, you will be using the actual expenses incurred, not your estimated $10080.

DGES 08-20-2016 05:56 PM

So trying to get cash back from last year aside. How exactly do I calculate my monthly payment from this month till next July 1st when we exchange taxes, notices of assessments etc.?
I understand that as I get a raise in salary the CS will increase according to the government tables but it's the Extraordinary Expenses (child care) that is fluid and will actually cease at some point. For now I just want to understand what I should pay her next month and onward.

Rioe 08-20-2016 07:21 PM

Since both your taxes are done, figure out what your current incomes are, and calculate the proportion you should each pay. Did you understand how I got the 45% and 55% ratio above for last year?

So this year, each time she gets a bill from the daycare, pay your % of it to her. Does the daycare bill monthly? Weekly? Does it vary a lot?

stripes 08-20-2016 11:09 PM

You use your most recent income information to calculate your share of S7 going forward. For most people, their most recent income information is the previous year's tax return (line 150). So if your 2015 incomes were in a ratio of 45/55, you use that ratio to determine who pays what in 2016 (even though your actual 2016 income may be different from your 2015 income). After you do your 2016 taxes, that ratio takes over, going into 2017. In other words, the S7 ratio is always lagged about a year behind the actual expenditures (exact lag depends on when in the year you exchange financial info). Is that what you were asking?

(I know there are some other ways to calculate income ratios, but this is the most commonly used).

stripes 08-20-2016 11:12 PM

(to get back to your original post - after your kids finish child care, there will be no ongoing expenses so you will not be paying your ex when they aren't in care any more. The amount you pay for their last year of child care is determined by the ratio of your incomes in the most recent tax information - the second-last year).

DGES 08-21-2016 08:35 PM

Rioe/Stripes,
Thank you very much! Both responses have been very helpful. So just to confirm then.
We exchange tax information every July. So, from this month till next July I should request a copy of the daycare invoice and I pay my 45% as set out from our most recent taxes (2015)
AND
To address the tax deduction and subsequent refund she receives from those payments, each year at tax time we calculate a second "mock" return to determine my share of that benefit using the ratio determined at that time or the ratio from the year before?

Janus 08-22-2016 03:32 PM

Quick aside: Why is it the payor's responsibility to make the daycare caluclation?

Let the recipient produce the documentation, and make the appropriate calculations including showing proper documentation showing the net cost of daycare after tax deducations. Until the recipient has produced the material, I wouldn't pay her a penny.

Women can do math too, we don't have to be so sexist.

DGES 08-22-2016 04:48 PM

That's actually how all this started she came up with a "fair" calculation initially but it was more then I had recalled estimating with my lawyer (didn't have the actual financials at the time). Turns out it was the amount not including the tax deduction. Now everything I've calculated is wrong as its lower. Thanks, I'll update when there has been some progress.


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