It's Tax Time!

[#1StepMom]

While sitting down with my hubby to keep him company while he does his taxes (we file seperately, for obvious reasons)... I had some saddening revelations...

As a non-custodial parent, he cannot claim his son as a dependent, as his son only "visits" him in his home.

As a non-custodial parent who also pays for extraordinary expenses (activities, daycare, camps, medical and dental, etc.) on top of child support, he cannot deduct these expenses on his taxes, not to mention child support being completely non-deductible!

It just seems so unfair... for a parent who pays thousands or tens of thousands of dollars yearly to support his child, to not be able to deduct ANYTHING.

Just a little vent I needed to get out... ;-)

[FL_Needs_To_Change]

I know your situation, and I also know the ex would not agree to either of these suggestions but for the benefit of others in similar situations.
A search of this forum you'll find several posts on this and how to deal with it.
But basically a legal document stating the duration of time the child resides with the non-custodial parent may be accepted by CCRA for allowing tax credits associated to extraordinary expenses, alternately a share in the return due to these credits received b y the custodial parent.

IE calculate the custodial parents return without the credits, then add the credits to see how it changes the return, then split the portion of the return that resulted from the tax credits for the child(ren) in question.

[MommaFish]

Hi,

I also just discovered the same thing. This is the first time, after 4 years of separation, that there's been any issue about claiming the children as dependents. Mainly because my ex didn't file his taxes for 3 years and this 4th year is the first time that I have paid him "child support". I put that in quotes because the amount is very low -- $400 a year. We have 50/50 custody and all expenses are shared equally.

However, if I understand the tax guide, I may not be able to claim one of my children as a dependent because of this $400. Nor can I deduct that amount, and the ex pays income tax on it. (Isn't that amount being taxed twice?) My solution for next year is going to be to pay $400 more of the school fees for the year and ensure that there is no "child support", as such.

This just seems ridiculous. We parent for equal amounts of time. We split everything equally. But for the fact that his salary is slightly lower than mine, resulting in "child support" I might not be equally entitled to the income tax benefit.

I'm still hoping that the CRA allows me to claim one child, and the ex the other.

[billm]

CS payments are not taxable - they are just cash - the payer pays the tax on it (ie. the payor cannot deduct it from their income). The receiver does not pay tax on it.

[dadtotheend]

Hi,
However, if I understand the tax guide, I may not be able to claim one of my children as a dependent because of this $400. Nor can I deduct that amount, and the ex pays income tax on it. (Isn't that amount being taxed twice?) My solution for next year is going to be to pay $400 more of the school fees for the year and ensure that there is no "child support", as such.

This just seems ridiculous. We parent for equal amounts of time. We split everything equally. But for the fact that his salary is slightly lower than mine, resulting in "child support" I might not be equally entitled to the income tax benefit.

I'm still hoping that the CRA allows me to claim one child, and the ex the other.

Yep, the support payments screw you. See lots more discussion on this very point at http://www.ottawadivorce.com/forum/f...no-sense-3639/

[MommaFish]

Thanks for pointing out that other thread, Dadtotheend.

I sent in the documents they asked for with a letter signed by my ex and I detailing our custody schedule. He lives in Quebec, and told me he did, in fact, have to pay tax on the $406 he declared having received in child support. Perhaps that was only for his Quebec return, I don't know. Maybe Ontario and Quebec differ in that respect?

At any rate, I'm hoping that they will recognize our 50/50 for what it is. I do receive the CTB 6 months of the year. In the future, we will simply arrange for my ex to pay $400 less in daycare over the year, since we both pay our half directly to the daycare, and that way no money will change hands between us.

I also have to think that the mediator who worked with us could have or ought to have pointed out this aspect of support payments. But then, there are a lot of things I found she mishandled. Also, our mediated agreement is not binding, has not been to the courts, and so technically, I suppose, there is nothing to prove that I'm supposed to pay anything.

I'm just astonished at the way the system works. We were both pretty naive about the whole issue when we separated, and I guess because of it, we had been able to truly focus on the kids without this kind of financial distraction and turmoil. We have had our differences, but usually managed a fair compromise on our own. I imagine this must be hell in a high conflict separation/divorce. The system itself is so focused on the money end of caring for kids, it becomes very easy to allow that to become your focus, too. When you realize how badly you're being screwed over, and you're already angry with your ex, it just adds fuel to the fire.

/sorry for the rambling post. What's new to me is, I'm sure, old news to many of you.