Claiming Legal Fees (Case Law) For Tax Deduction in Child Support Matters

[maxwellsmart]

Well done . Thank you

[involveddad75]

I claimed 40% of my legal fees (which were trying to get to trial) I self represented and after some negotiation with CRA was approved for all of it.

[maxwellsmart]

To clarify last para above should read deduct on income tax return

[maxwellsmart]

Non custodial parent paid x in section 7 expenses to third parties directly . A part of legal proceedings non custodial parent establishes that custodial parent owes him an amount being her share of the section 7 expenses he paid .

Can non custodial parent deduct legal fees incurred to receive the mother's share of the add on ( section 7 ) costs?

[now i see the moon]

payor

Hi Orleans Lawyer,

In your examples, only the second of them would be acceptable to CRA for purposes of claiming legal fees for child support, right?

[OrleansLawyer]

Does anyone have experience of being a net payor in a shared custody regime and having been denied their deduction for legal fees? If this is true is it because both parents are technically "payors" of child support and therefore neither can claim legal fees?

What some people do is spell out that each side is receiving child support.

Ie, Bob pays Betty $500 per month for the children Sam and Sally, and Betty pays Bob $700 per month for the children Sam and Sally, with a net payment of $200 per month.

Due to the rules surrounding claiming children as equivalent to spouse, the above is rephrased at some points to read:
Bob pays Betty $500 per month for Sam, and Betty pays Bob $700 per month for Sally, for a net payment of $200 - and each parent claims the child they receive support for, and claim legal fees to obtain the support.

How often this is accepted because CRA approves of the practice, and how often simply because The Gods Are Merciful, is an unknown.

[FB_]

Thanks FB_ for the information. That's reassuring. Did they ask you for receipts, or official documentation (divorce judgement etc), or was it just an acceptance without question?

Well the whole thing is kind of a process. I had to get them to recognize me as divorced/separated first. Then I had to file a T1 adj for 2011 and 2012 and got the money this year.

The whole process of proving I was separated/divorced took almost 2 years with lots of documentation, several appeals but in the end it it all as expected.

You can review the 17 page thread here

http://www.ottawadivorce.com/forum/f...parated-13862/

[now i see the moon]

Thanks FB_ for the information. That's reassuring. Did they ask you for receipts, or official documentation (divorce judgement etc), or was it just an acceptance without question?

[FB_]

Does anyone have experience of being a net payor in a shared custody regime and having been denied their deduction for legal fees? If this is true is it because both parents are technically "payors" of child support and therefore neither can claim legal fees?

I pay an offset amount to my ex.

I claimed 20% of all my legal fees (the portion related to child support) and the CRA accepted them.

Claimed in tax years (2011, 2012, 2013)

[now i see the moon]

Does anyone have experience of being a net payor in a shared custody regime and having been denied their deduction for legal fees? If this is true is it because both parents are technically "payors" of child support and therefore neither can claim legal fees?

[involveddad75]

Then why is my ex allowed to claim 40% of her legal fees regarding the case.
I always paid child support, and after trial it came out that I had over paid.

[Mess]

Mess I think you took my post wrong..

I think I did put the wrong emphasis on your intent, but not your reasoning.

You want to argue with the tax law regarding a legal suit to reduce cs payments by an access parent. This is wrong for the reasons I stated.

An analogy, you file a suit with the cell phone company because you believe you are being overcharged. You then want to go to tax court and argue that you may deduct the legal fees as though you were seeking unpaid wages from the cell company.

Seeking a reduction in payment is NOT the same as seeking payment of what you are owed. This is explicitly covered in CRA explanatory pages.

You may seek a deduction for legal fees that are incurred to receive wages that are owed, payments from clients for professional services, or unpaid child support payments. This all stems from the same principle.

[SRT]

My experience with line 232 of the T1 is that I had received a letter from my family lawyer around tax time. I was totally unaware of this claim since I was the payor, however the explaination was that technically in a shared custody arrangement both are considered to be payors, it is the difference that is calculated for the offset.

The letter stated the Income Tax Act and the amounts to obtain child support of over $7000 each for the 2011 and 2012 tax years. (2 seperate letters for each year, but I had claimed them together for 2012). Eligible amount to claim was stated as being approximately 20% of those amounts, so for both years they had totaled over $2900.

Having work related legal benefits of $500 per year, I had to recalculate my claim by taking $1000 off of the total amount for the 2 years and then taking 20% of that amount for my final claim amount.

Being honest with CRA only helps you down the road and at the end of the day the $2700 credit was better than a kick in pants.

[OrleansLawyer]

question to OrleansLawyer was a tax court question

I would preface any response by observing that the vast majority of my posts deal with family issues. While I make no claim to being a professional (see disclaimer at bottom), I would also observe that the intersection of family law and tax law is much like the intersection of war and famine; seldom do those who deal with one have training in dealing with the other, and the marriage of the two is generally deleterious for everyone involved.

In my view any access parent who is fighting to get more access could argue that they were fighting for their share of the child support.

Some people make this argument when they do their taxes.

Was there an effort to secure support, and was it made in good faith?
CanLII - 2010 TCC 209 (CanLII)

However, the claim must be legitimate. Simply throwing legal fees under that heading (even if pursued for support, if the claim was frivolous) will be unlikely to succeed:
CanLII - 2011 TCC 427 (CanLII)

DISCLAIMER:
Everything said in this, and any other, message is not intended to be taken as legal advice. I do not hold myself out to be a lawyer, adult or literate. Any resemblance this or any other message may have to legal advice or common sense is entirely coincidental. This message was generated through the combination of a monkey hitting a keyboard with a rock and advanced spell check software.

[involveddad75]

The reason they let recipients claim it and not payors is because it actually normally makes no difference since recipients have such low income -the conspiracy behind the law!

Actually I believe the reason has more to do with business and civil law.
If I run a business and am having problems collecting a payment and have to take someone to court to get a payment for services I have done for them. Then that is a business expense and can be written off, and thus legal fees for enforcing income can be written off.

That's how I understand why legal fees for child support can be claimed.