Hello,
I've noticed many people here are good at figuring out financial puzzles - anyone want to have a go at this one?
Background:
-ex and I have 50/50 parenting of one daughter
-I'm the higher earner, though not by much. (We are in the same tax rate, 38%).
-in our Minutes of Settlement, we agreed that I would pay the first $370 for our daughter's child care every month. This is in lieu of S3 child support (for reasons which made sense at the time, but are not really relevant now). He would reimburse me the half of the costs above $370. (Child care was $420 per month during the school year and $500 per month in July and August).
-this meant I was making a net transfer to him each month of $185. (For comparison, the setoff would have been about $137 per month).
-we have a new financial arrangement in the divorce judgment, which is still awaiting signature by the judge, according to which we will each be paying the child care provider separately and in proportion to our income and will share the deductions accordingly, commencing March 1 2013. We also switched to straight setoff payments for S3 on March 1.
-I paid the full amount to the provider directly; all receipts and cancelled cheques are in my name only.
-not really relevant background: ex is a garden-variety jerk, prone to throwing tantrums and name-calling, and coming up with dubiously legal nickel-and-dime schemes to get more money out of me. He is also chronically arrears in child care reimbursements and his share of S7. I know this shouldn't really matter, but it colors my judgment when dealing with him.
Now it's tax time, 2012. I have receipts for $5200 from the after-school care provider. Do I:
a) claim all $5200 as a deduction on my return, because all the paperwork is in my name?
b) claim $5200 minus the amount that he reimbursed me for costs-above-$370 last year?
c) claim a proportion of the $5200 that is equivalent to my proportionate share of our incomes, as it says in our judgment going forwards from 2013?
d) claim $5200 minus $185 per month, because that was standing in for S3 last year?
e) Something else?
My friends say I should go with a), largely because they think he's a jerk. I think option b) seems the most equitable. C) reflects the new agreements in our judgment, though they weren't in force in 2012. D) seems like the most conservative and perhaps safest reading of CRA rules because child support is not deductible, and this was child support going under another name.
I have a consultation with a tax professional (NOT H&R Block!) set up, but would be interested in what others make of this.
I've noticed many people here are good at figuring out financial puzzles - anyone want to have a go at this one?
Background:
-ex and I have 50/50 parenting of one daughter
-I'm the higher earner, though not by much. (We are in the same tax rate, 38%).
-in our Minutes of Settlement, we agreed that I would pay the first $370 for our daughter's child care every month. This is in lieu of S3 child support (for reasons which made sense at the time, but are not really relevant now). He would reimburse me the half of the costs above $370. (Child care was $420 per month during the school year and $500 per month in July and August).
-this meant I was making a net transfer to him each month of $185. (For comparison, the setoff would have been about $137 per month).
-we have a new financial arrangement in the divorce judgment, which is still awaiting signature by the judge, according to which we will each be paying the child care provider separately and in proportion to our income and will share the deductions accordingly, commencing March 1 2013. We also switched to straight setoff payments for S3 on March 1.
-I paid the full amount to the provider directly; all receipts and cancelled cheques are in my name only.
-not really relevant background: ex is a garden-variety jerk, prone to throwing tantrums and name-calling, and coming up with dubiously legal nickel-and-dime schemes to get more money out of me. He is also chronically arrears in child care reimbursements and his share of S7. I know this shouldn't really matter, but it colors my judgment when dealing with him.
Now it's tax time, 2012. I have receipts for $5200 from the after-school care provider. Do I:
a) claim all $5200 as a deduction on my return, because all the paperwork is in my name?
b) claim $5200 minus the amount that he reimbursed me for costs-above-$370 last year?
c) claim a proportion of the $5200 that is equivalent to my proportionate share of our incomes, as it says in our judgment going forwards from 2013?
d) claim $5200 minus $185 per month, because that was standing in for S3 last year?
e) Something else?
My friends say I should go with a), largely because they think he's a jerk. I think option b) seems the most equitable. C) reflects the new agreements in our judgment, though they weren't in force in 2012. D) seems like the most conservative and perhaps safest reading of CRA rules because child support is not deductible, and this was child support going under another name.
I have a consultation with a tax professional (NOT H&R Block!) set up, but would be interested in what others make of this.
Comment