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Day care expenses - Deductions - Tax Season

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  • #16
    Alextu,
    I understand your questions, my ex and me were in a similar situations what with self-employed, deductions, gross income, daycare receipt to the lower income, etc.

    If you paid the daycare, and you should have the receipts, then you take the tax deduction.

    In 2008, here is the deal: You declare to each other that you are separating and you sleep in separate rooms. Ideally have some kind of written agreement with each other, or send you spouse a registered letter, or have some kind of email to refer to. This is if your ex has a reason to dispute the separation date.

    So this is your official date of separation. There is a 90 day cooling off period, and then you inform Canada Revenue Agency. There is a form online that you can download and fill out. This is a declaration that you separated 90 days earlier. This will affect things like pensions, Child Tax Credit, and how you may split daycare receipts and such.

    For the first year you were separated, you should consider the months before and after separately, and split receipts in proportion. So if you moved into separate rooms July 1st, then split the year 50/50. For the first part, your ex should take the deductions, for the second part, if you paid, you take those deductions. (This is because your ex was the lessor income for the first part of the year.)

    Your tax return won't have a line to explain all this, but you shoud split the receipts accordingly so that if you are audited, then there is no funny business. CRA won't really know how much you paid for childcare Jan-June compared to July-Dec, so it may be up to you to split the receipts, but if you are audited you will have to explain yourself. Just do it properly then.

    You may only have 1 receipt. Make a photocopy for your ex, or require a photocopy from him. If he refuses, then explain to the daycare that the receipt was "lost" and get a copy. Only use the proportion you are entitled to.

    If you did not inform CRA that you separated, then do it immediately and give them the date. You should really do this asap to straighten out the Child Tax Credit. They will tell you how it is split according to the time each of you have the children. They will collect any overpayment to one parent, and send it to the other, but they will not pay retroactively if your income would indicate a larger sum, if you wait a year to tell them.

    Now, if you only just informed them this May that you separated due to different addresses, you may have to correct the date of separation to use the tax receipts from daycare. Call the CRA help line, and also there is a lot of useful information available on the website .

    Finally, if you are paying the actual amount and he is not paying his share in addition to CS, he is out of luck for tax receipts, unless you are willing to be generous. You are the payor, the fact that you draw the amount out of CS cheques doesn't entitle him to any deductions for child support.

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    • #17
      Day care expenses

      thanks all for the information....it really helps....

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      • #18
        I'm still confused

        It's been a while but I need a little guidance calculating after tax daycare fees and I've read a number of posts but am still lost (I don't do my own taxes).

        I have her line 150 and the daycare costs but don't know how to use that to find the after tax costs. I used a formula I found in the forum to find our percentages.

        Sorry but help

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        • #19
          Daycare costs of $1000 reduce your taxable income by $1000. If your marginal tax rate is 24% then you would get $240 back.

          Just go on to TurboTax/CuteTax/TaxChopper online (or similar) and plug in your earned income 1) with daycare costs and 2) without daycare costs, and calculate the difference in tax owing between 1) and 2).

          Even easier: Plug in your numbers here: TaxTips.ca - 2013 and 2014 Canadian Income Tax Calculator.

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          • #20
            Thanks but still confused

            I used the link you provided and according to the numbers I get back I'll be paying more Pro Rata than I am now with no increase in wages, she makes more and is paying less than 2 years ago for daycare. I'm sure I'm doing something wrong. I may have to visit a lawyer or an accountant to get this figured out.

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            • #21
              If you like, you can send me the numbers you are using and I can double check ... PM?
              - your taxable income then and now
              - her taxable income then and now
              - the gross daycare fees (paid by her?) then and now
              - which of you is claiming the child as 'equivalent to spouse (eligible dependent)', then and now
              Last edited by dinkyface; 10-10-2014, 10:57 AM.

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              • #22
                It's there

                And thanks for any time, energy and knowledge

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                • #23
                  It looks like you should have been paying $200/mo then, and now should be paying $160/mo. The problem is there's no way to know how your original pro-rata amount was arrived at.

                  Holy-moly, I can't figure out the messaging stuff. I can no longer find the PM you sent me, and I think I sent my response to you using the wrong method...let me know if you didn't get it.
                  Last edited by dinkyface; 10-10-2014, 02:25 PM.

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