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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 07-07-2006, 09:21 AM
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Default Need help with Child Support and daycare expenses

OK, here's the sitation:

My ex moved in with his girlfriend in Jan of this year, and just got married. We both have 50/50 custody/access to the kids.

Previously, our arrangement was that he would pay all the child care expenses himself, on his taxes claim the kids as dependants (for that credit) and the daycare expenses, and then after he got his refund back, figure out how much of my pro-rated share was owed to him from daycare, and minused that from the amount of support he would have owed me for the year. This meant I usually got a lump sum cheque for a couple of thousand once a year.

However, now he's saying he won't be able to claim the kids as dependants any more on taxes because he is married. So far, he has paid the day care expenses this year.

My understanding is that you have to claim the dependant credit in order to claim the daycare expenses. Is this true?

Does anybody have any ideas how this support should actually be done? I read somewhere that he should estimate the amount of the childcare expenses after taxes and take that off of his salary and plug that new number into the child support tables. Does that make sense?

I'm not so fond of a lump payment, but while they are in daycare, I'm not sure how else to calculate things as I don't want to be paying a lot up front. Especially since only one of us can claim the credits on our taxes.

Any ideas would be greatly appreciated!!
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Old 07-07-2006, 11:14 AM
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Just to clarify... your ex kept the tax refund form the equivalent to spouse (e-t-s) and daycare. Seperate from this he would subtract your daycare portion from the CS owed to you... and give you a cheque for the difference. I assume the cheque to you was paid from the refund. Correct?

So you split daycare costs (pro-rated). He pays you an altered CS payment based on the fact he keeps the refund? So basically a reduced CS to you. BTW, how are you calculating CS? Offset or the full table amount. I assume full, redcued for 50-50 by the refund?

I just want to make sure I understand before I reply.
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Old 07-07-2006, 11:20 AM
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oh... and just off the top of my head, I assume your ex's refund is about $4-5K and you get $2-3K.

I guess it comes down to are you basically just trying to split the refund and pro-rate the daycare. Or, do you see yourself (or him) geting bit more based on the offset apporach to CS payments.
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Old 07-07-2006, 11:34 AM
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"Just to clarify... your ex kept the tax refund form the equivalent to spouse (e-t-s) and daycare. Seperate from this he would subtract your daycare portion from the CS owed to you... and give you a cheque for the difference. I assume the cheque to you was paid from the refund. Correct?"

Yes

"So you split daycare costs (pro-rated). He pays you an altered CS payment based on the fact he keeps the refund? So basically a reduced CS to you. BTW, how are you calculating CS? Offset or the full table amount. I assume full, redcued for 50-50 by the refund?"

Yes. We are calculating CS buy looking up both our salaries in the table, then minusing what I would owe him from what he would owe me. He makes more, therefore he ends up owing me about $300 a month.

Our goal is to split the e-to-s credit equally, each pay a pro-rated share of after tax day care expenses, and me to get my extra CS. This would be very easy if not for the day care expenses in it. I've indicated to him I'd like some money monthly instead of a lump sum, but I'm not sure how best to calculate how much.
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Old 07-07-2006, 03:22 PM
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Oki-doki

Let's divide this issues separately. Now... I am not 100% sure of everything, especially dealing with CRA. But why not do this.

Your ex will lose to e-q-s since he remarried. Technically by paying you CS he is also not eligible for e-q-s (nice, eh). Paying you a lump sum not called CS got around that tax loop-hole. Either way, you should claim the e-q-s. From that deduction split the refund.

Next, each pay the daycare your pro-rated amount and each get a tax reciept. Each claim and get refund accordingly. If your daycare center balks at this, talk to them nicely and they should do it. All the daycare centres, child providers, and home care I have dealt with over the past years have no issue providing two tax receipts. Hey, they just want to get paid.

As for the CS amount... you could do the straight offset... and then use the above advice... or go offset minus his portion of the refund and you keep the refund...

BTW, I congratulate you and your ex for working this out. If you do not, you could end up in years of court like me and piss away $1K's of dollars to lawyers that could be spent on eduction plans, etc.
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Old 07-07-2006, 03:37 PM
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Thanks for the advice.

However, I read somewhere that you have to claim the e-t-s credit to be able to claim the day care expenses on your taxes?
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Old 07-08-2006, 06:55 AM
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That is not correct. You can claim daycare and not the e-t-s credit. That I am 100% sure of.

I have spent years dealing with CRA regarding divorce, shraed parenting, and deductions and their left hand never knows what their right hand is doing. I have been audited, assessed, re-assessed about 100 times since divorce and talked to about 100 different people at CRA. My advice... if you are never sure, do it and beg for forgiveness later....
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Old 07-08-2006, 07:38 AM
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Decent Dad,

I agree. It is easier to make a mistake and ask for forgiveness.

lv
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