Ottawa Divorce .com Forums


User CP

New posts

Advertising

  Ottawa Divorce .com Forums > Main Category > Financial Issues

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

Reply
 
LinkBack Thread Tools
  #1 (permalink)  
Old 03-08-2017, 01:10 PM
Junior Member
 
Join Date: Jul 2014
Posts: 7
Proudpapa2014 is on a distinguished road
Default Tax write offs for non-custodial parent

Hello, I fought for joint custody of my son and won but I am a weekend dad and I pay child support.

I've read conflicting messages about whether or not I can claim legal fees incurred during my custody battle since I am paying child support. Some seem to indicate that since I'm paying child support I can't claim a penny of legal fees, other sources seem to indicate that people have appealed this and won, but I'm lost as to which source to trust. Does anyone have a definitive answer on this?

I am also livid to read that I cannot write off the day care expenses I am paying because I am not the custodial parent. How can this be possible? If this is the case then it is an absolute outrage.

Lastly, from what I've read one of the few expenses that I am able to declare as the non-custodial parent are expenses which occurred when my son was physically with me. This would include things like memberships, clubs and other activities (that's my understanding). I don't see where I would declare these expenses on my tax return though.

Is anyone able to shed some light on any or all of these issues?
Reply With Quote
  #2 (permalink)  
Old 03-08-2017, 01:32 PM
Senior Member
 
Join Date: May 2010
Location: Hamilton
Posts: 3,717
HammerDad will become famous soon enough
Default

OK, I can't speak to legal fees regarding your custody battle. My understanding that you cannot write those off, but I could be wrong.

As for daycare, who is getting the receipt for daycare? Is it your ex alone, or both of you? Hypothetically, if it is just your ex and she is writing it off, you are only supposed to be paying for the net amount of daycare. Meaning the cost of daycare after any tax credits or subsidies are applied. So (using simple hypothetical math) you make $60k and your ex makes $40k, that means you'd be on hook for 60% of daycare. Daycare costs $1k a month. Your ex writes it off and gets $3k back come tax time. That means the net cost of daycare was $9k, and you should pay 60% of that.

How you work that out between you and your ex becomes the difficult part. Some families work it that the reduced amount is spread across each month. Others require the custodial parent to reimburse the NCP the difference come tax time. Both ways can be tough if you have a difficult ex. But if you are exchanging NOA's each year, you should be able to make a rough calculation of what you should be reimbursed.

I don't think you can claim any child care expense as you are the NCP. I am in the same boat and have never been able to claim anything.
Reply With Quote
  #3 (permalink)  
Old 03-08-2017, 01:56 PM
Junior Member
 
Join Date: Jul 2014
Posts: 7
Proudpapa2014 is on a distinguished road
Default

Thanks a lot for your reply. Wow, I feel completely shafted, but I'm pretty sure that confirms everything I already believed to be true. My ex and I split the daycare payment but she receives the tax bill in her name and I reimburse her my share.

Are you saying that she could claim the entire amount on her tax return and then pay me the difference? We just settled our custody arrangement last year. She's living with a new guy and may be filling out a joint tax return with him, so I have a feeling asking her to do something like that could be a complete mess, but I don't like the idea of leaving money on the table either.
Reply With Quote
  #4 (permalink)  
Old 03-08-2017, 02:14 PM
Senior Member
 
Join Date: Mar 2014
Posts: 2,890
rockscan will become famous soon enough
Default

Any costs you pay that carry tax benefits are to be calculated as "net cost". This means day care, sports, arts, medical and school. The easiest way to do this is to do a dummy return with the expenses and then without the expenses and determine what the tax benefit is. Subtract the tax benefit from the cost THEN calculate your proportionate share.

From what I understand, legal fees are not tax deductible anymore but spousal support is. Its been that way for well over a decade so not sure who told you it was a tax benefit.
Reply With Quote
  #5 (permalink)  
Old 03-08-2017, 02:15 PM
Senior Member
 
Join Date: May 2010
Location: Hamilton
Posts: 3,717
HammerDad will become famous soon enough
Default

Quote:
Originally Posted by Proudpapa2014 View Post
My ex and I split the daycare payment but she receives the tax bill in her name and I reimburse her my share.
Not sure what you mean here. I think you may mean the bill from the daycare and then you pay her your proportional amount.

Quote:
Are you saying that she could claim the entire amount on her tax return and then pay me the difference?
That is what is supposed to happen. The CP (in situations like ours) is the only one who can claim the kid and kid related expenses come tax time. If she is the one getting the invoices from the daycare, she will most certainly be writing off the whole expense while only paying X% of it. Essentially, she is claiming your portion as hers. She should be reimbursing you your % of the tax credit daycare gives.

Whether or not you are willing to go after it will depend on your risk tolerance with your ex. If the ex is amicable and a reasonable person (likely not, or else they wouldn't be your ex), you could reason with them and explain that they are claiming 100% of an expense they only paid X% of. That the remaining % you are entitled to be reimbursed. Here is the link to the government webpage:

Step 7: Determine if there are special or extraordinary expenses - The Federal Child Support Guidelines: Step-by-Step

It sets out an example of just this situation.
Reply With Quote
  #6 (permalink)  
Old 03-08-2017, 08:27 PM
Senior Member
 
Join Date: Dec 2014
Posts: 230
Stillbreathing is on a distinguished road
Default

[QUOTE=rockscan;

From what I understand, legal fees are not tax deductible anymore but spousal support is. Its been that way for well over a decade so not sure who told you it was a tax benefit.[/QUOTE]

This statement is incorrect. I have been writing off my legal
Fees now for every year that we have been separated. My lawyer simply sends my accountant a letter stating the total amount I paid $100,000 and that 70% ($70,000) has gone towards trying to get SS and CS. I was audited last year by CRA who asked for the letter from my lawyer. I sent it. They were happy and the deduction stands. This year (2016) I will be writing off a slightly smaller amount.
Reply With Quote
  #7 (permalink)  
Old 03-08-2017, 09:21 PM
arabian's Avatar
Senior Member
 
Join Date: Jan 2011
Location: Western Canada
Posts: 9,843
arabian will become famous soon enough
Default

For what it is worth, I know personally that money paid to my lawyer defending my SS Order for all those years in court was, indeed 100% tax deductible. Every year I had to provide a letter from my lawyer to CRA. My ex was not able to claim his legal fees trying to bust the Order.
Reply With Quote
  #8 (permalink)  
Old 03-09-2017, 05:51 AM
Janus's Avatar
Senior Member
 
Join Date: Jul 2012
Posts: 1,294
Janus will become famous soon enough
Default

Legal fees to GET money are tax deductible.

Legal moneys to NOT PAY money are not tax deductible.

I think the idea is that if you spend legal fees to get money, then that was an expense to get income. Defending yourself against having to pay support does not get you income, and so is not a deductible against your income from a different source.

Hideously unfair to payors of course, but that's nothing new.
Reply With Quote
  #9 (permalink)  
Old 03-12-2017, 11:18 PM
Senior Member
 
Join Date: Aug 2009
Location: Mississauga
Posts: 162
Desperate_Dad is on a distinguished road
Default

Janus hit the nail on the head. Originally when I stupidly had a lawyer fighting child and spousal support, I won but was not able to claim legal fees. She lost and was able to deduct legal fees. A complete joke. That is one of the many reasons I don't use a lawyer and never will again.
Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


Similar Threads
Thread Thread Starter Forum Replies Last Post
2-2-5-5 --> 50-50 Residential Schedule Explained Tayken Parenting Issues 27 11-04-2016 09:13 AM
ODF beats ILA Rioe Divorce & Family Law 18 01-03-2014 04:40 PM
Spousal/Child Support Question Jenny Divorce & Family Law 6 10-01-2013 12:01 AM
Co-parenting ----post divorce bearall Parenting Issues 14 05-25-2010 11:14 AM
How credibility is affected in the eyes of Judges. gooddadgoingmad Divorce & Family Law 12 03-12-2006 03:05 PM


All times are GMT -4. The time now is 12:49 PM.