Announcement

Collapse
No announcement yet.

Tax write offs for non-custodial parent

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • 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?

  • #2
    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.

    Comment


    • #3
      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.

      Comment


      • #4
        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.

        Comment


        • #5
          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.

          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.

          Comment


          • #6
            [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.

            Comment


            • #7
              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.

              Comment


              • #8
                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.

                Comment


                • #9
                  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.

                  Comment

                  Our Divorce Forums
                  Forums dedicated to helping people all across Canada get through the separation and divorce process, with discussions about legal issues, parenting issues, financial issues and more.
                  Working...
                  X