Tax Filing Regarding Kids for Separated Couple Still Living under Same Roof

[Tayken]

Thank you Tayken, Mess.

As long as we have the child on a 50-50 basis, for CCTB and UCCB eventually it will be split between the two parents, as this is clearly stated on the CRA website.

But who can claim the child as a dependent in any given Tax year if the father pays the mother CS using the off-set method in a 50-50 situation? I hear that even this is written in the Divorce or Separation agreement that the two parents should claim the child on alternative years (again 'Family Law' vs 'Tax Law'), the dad can NOT claim the child because he pays CS. I think there is a Judgement on CanLii but I can't find it now.

Good question and rarely explained.

"Offset" means that BOTH parents are paying child support. You are just paying the difference but, the other parent is techincally paying child support. See how it works? CRA knows this and you won't have to explain it to them.

You can rotate the credits year-to-year and if you have an even number of kids... You can split them every year.

Good Luck!
Tayken

[LakeErie]

Thank you Tayken, Mess.

As long as we have the child on a 50-50 basis, for CCTB and UCCB eventually it will be split between the two parents, as this is clearly stated on the CRA website.

But who can claim the child as a dependent in any given Tax year if the father pays the mother CS using the off-set method in a 50-50 situation? I hear that even this is written in the Divorce or Separation agreement that the two parents should claim the child on alternative years (again 'Family Law' vs 'Tax Law'), the dad can NOT claim the child because he pays CS. I think there is a Judgement on CanLii but I can't find it now.

[Tayken]

It's sexist, heavily towards female - how true!

CCTB by default goes to the mother, the $100 Universal Child Care benefit goes to the mother. Also, despite some suggestions on this forum that in 50/50 shared custody situations, if a dad pays child support or SS due to differences in incomes, he can't claim the child as dependent - this is just not fair!

Mess gave you clear instruction on how to do it. I am going to break it down even more into steps:

1. Finalize your separation agreement and/or get a court order.
2. This agreement or order should state the following in some way:

a. Parent X and Parent Y shall share joint custody of Child A, Child B, Child C, ... Child Z.

b. The residence of Child A, Child B, Child, C, ... Child Z shall between the two parental homes of Parent X and Parent Y on a 50-50 basis.

c. Parent X will pay Parent Y $XXXX.XX in child support a month based on the "offset method" of calculating child support.

3. File the separation agreement (or order) with the court.

4. Pay the offset child support like you are supposed to.

5. File for UCCBT and CCBT and provide the order and explicitly point them to each and every paragraph that outlines point 2 subsection a through b.

6. CRA will do the rest.

They are not sexist per say... They are maybe lazy and looking for specific wording in the order or agreement that makes their jobs easier. Put in the right wording into the order and/or agreement and it will flow easily.

The KEY factor to the tax credits is joint and/or shared residence at a minimum of a 60-40 split. Call out all the exact elements in the agreement properly and you won't have any problems with CRA.

Good Luck!
Tayken

[LakeErie]

The purpose of Tax Law is to support the ability of the government to collect taxes.

...

To answer your main question, the CRA defaults the assumed custody of the children to the mother. It's sexist. Yes. That's what it is. Get used to it. The mother receives, and has always received during the marriage, the CCTB by default. The CRAs assumptions won't change unless you show them factual reason for it.

It's sexist, heavily towards female - how true!

CCTB by default goes to the mother, the $100 Universal Child Care benefit goes to the mother. Also, despite some suggestions on this forum that in 50/50 shared custody situations, if a dad pays child support or SS due to differences in incomes, he can't claim the child as dependent - this is just not fair!

[Mess]

The purpose of Tax Law is to support the ability of the government to collect taxes.

That doesn't mean I want to pay as much tax as possible, it doesn't mean I want you to. But it means you need to get real, what the heck do you expect? The CRA is not going to bend over backwards trying to find any and every way for you to save a few hundred bucks. That isn't their job, stop expecting it to be.

As Tayken points out, different provinces have different rules on the matter. As well, the issue is more of a common law one, individual family court decisions lead to precedents. There is no clear definition spelled out in the Ontario Family Law Act that will absolutely declare two people who are still residing at the same address as being separated. There are a number of criteria taken into account and then a decision is made case by case. In family court, the main issue here is valuation date for assets, other than that there is nothing really affected by the separation date.

All provinces would have to get onside with a clear definition and then lobby and pressure the federal government to agree to common definitions. It's not going to happen.

The CRA will review a case and if two people can show sufficient reasons to be considered separated, it will allow them to file as such. But it is far too easy to fake it and abuse the system, they have to check, there needs to be facts that can be shown.

If in a given month you can show that you closed all joint accounts, took each other off of auto insurance, sent letters to the school board and the kids' dentist and physician, put locks on separate bedrooms, and had your lawyers send offers to settle, these are facts that the CRA will take into account, and there are couples who have managed to get their agreement.

You expect it to be as easy as checking off a box on a form, and it's not. There is a process, for some, it can be shown easily if they have separate addresses. For those who share the same address it's not going to be so easy.

To answer your main question, the CRA defaults the assumed custody of the children to the mother. It's sexist. Yes. That's what it is. Get used to it. The mother receives, and has always received during the marriage, the CCTB by default. The CRAs assumptions won't change unless you show them factual reason for it.

[LakeErie]

Two very different definitions:

Family Law - "separate and apart" can mean "emotional" separation. This is the date that can be used for the "date of valuation".

Tax Law - "separate and apart" means "physical seperation" of the two people. Two different residences.

The ontology between the two terms is different in both areas of law. They should really change the definition in the Tax Law or update it to be the same as family law. The problem is that Family Law is jurisdictional bound to each province and Tax Law is federal.

Good Luck!
Tayken

Thank you Tayken, for all your help.

I think the fact that there are cases of married couples still living at the same address but having filed taxes separately and it is being recognized by CRA proves that the Tax Law has its problems.

[Tayken]

I think we have seen on the forum that there are people who had successfully argued with CRA that even they lived at the same address, but indeed they were separated and didn't file the tax returns together.

Actually my question is who should file the child as dependent, if the child moves from one room with mommy to another room with daddy about 50/50 of the time.

The definition of "separate and apart" in Tax Act has always bothered me. If two people living under the same roof, or sharing the same address are defined as a 'couple', then how about two strange people share a rented apartment? How about two university students sharing the same Dorm etc? Are they 'couples', clearly no!

Two very different definitions:

Family Law - "separate and apart" can mean "emotional" separation. This is the date that can be used for the "date of valuation".

Tax Law - "separate and apart" means "physical seperation" of the two people. Two different residences.

The ontology between the two terms is different in both areas of law. They should really change the definition in the Tax Law or update it to be the same as family law. The problem is that Family Law is jurisdictional bound to each province and Tax Law is federal.

Good Luck!
Tayken

[LakeErie]

Bingo. Under the Divorce Act, FLR, CLRA, et all... The definition of "separate and apart" is different than under Tax Law.

Both parents have to be at two different addresses to be "separate and apart" under Tax Law.

Good Luck!
Tayken

I think we have seen on the forum that there are people who had successfully argued with CRA that even they lived at the same address, but indeed they were separated and didn't file the tax returns together.

Actually my question is who should file the child as dependent, if the child moves from one room with mommy to another room with daddy about 50/50 of the time.

The definition of "separate and apart" in Tax Act has always bothered me. If two people living under the same roof, or sharing the same address are defined as a 'couple', then how about two strange people share a rented apartment? How about two university students sharing the same Dorm etc? Are they 'couples', clearly no!

[Tayken]

all i know that even though we were separated CRA would not accept it until he moved out.

Bingo. Under the Divorce Act, FLR, CLRA, et all... The definition of "separate and apart" is different than under Tax Law.

Both parents have to be at two different addresses to be "separate and apart" under Tax Law.

Good Luck!
Tayken

[TLCRN]

I agree with cynthia 10. After being investigated by Revene Canada as a result of the ex reporting me for not filing common law but separately, you can live under the same roof, at the same address but separately.
The utilities are also in my name, no joint account, each have our own insurance, I am NOT under his health care benefits, I pay for maintenance, it is "my dog" and pay for the expenses. Everything is separate, have our own lives.
He pays monthly as he would be living somewhere else with the agreement that he is not claiming as "rent" as it's a different category and rules.
We both benefit this way financially and have a roof over our heads, that's it!

[cynthia10]

I proved to the CRA, that while he lived at the same address, in the basement it was separate and apart by supplying them with records such as utilities in my name, no joint bank account,he was not on my insurance, he continued to pay child support plus extra for room and board this was proven by way of my bank statements, he had a separate entrance and washroom facilities.I claimed the children as always, and while the basement arrangement was for a short time having separated in 2002,the living arrangement came about in 2006-2007, we always file as separated. They sent a letter and questioned it.It took 6 months of back and forth correspondence,to prove but was victorious in the end.

[standing on the sidelines]

all i know that even though we were separated CRA would not accept it until he moved out.

[LakeErie]

Here is the situation: we are not married (common-law) but have a small child born in Jan 2011. I know a couple automatically becomes common-law after they have lived 12+ months, or the moment a child is born. We have lived together for over two years and have never filed for joint income taxes as common-law couple, which I know according to the CRA definition is not right. We have not been on good terms for the past year, so for this year to file for 2011 tax returns it’s unlikely that we will file jointly. She has been insisting that she is a single mother as she took one year maternity leave to care for the baby for the entire year in 2011 (I also took time off and had been greatly involved in the child’s life), and I think she has been collecting CCTB and maybe other government benefits such as GST as a single parent. I know it’s wrong but I don’t want to argue with her.

I have read others’ posts that couples can be registered as “separated” for their civil status during the divorce process even living under the same roof, but how about their kids? Parents can live in separate rooms, but for tax purposes, who would claim the child as dependent? Money aside, I feel very uncomfortable if the mom claims as single parent, because if one day we go to court this would put me into a bad situation as if I have recognized her as the primary care giver. But I can’t stop anyone from doing that.

Does anyone have any such experience and dealing with CCRA?

Thanks a lot.