Tax / Child Care Question

[Human Way]

Hi there

I have been talking to my ex about tax related questions. She claims all the tax benefits of having our child. I have never made a big deal about it. But i have been reading through some of the post here.

We are evenly splitting the before/after day care cost. Typically around $250 a month. times 10 months = 2500. So i pay 1250 in a calendar year.

I have asked her if i could get the tax credit of that 1250 dollars. I pay full table amount for CS. I feel i should be able at-least to receive the tax credits that are available.

How do i convince her of this?
What line on her tax return should i ask her to look at?
Is there a simple calculation?
Or is the amount of 1250 so small that it might not be worth pursuing?

Thanks for your help. This forum and all the wisdom on it rocks!

cheers

HW

[Berner_Faith]

You should be paying your share of daycare costs AFTER tax benefits.

An example, my bf's ex wanted him to pay his share of a $700ish daycare costs, which was for 7 months. He was more than happy to, however his lawyer wrote back to her lawyer and stated that he would only pay his share of what was left over after her tax credit... she happens to get more a month for this, than she pays, so currently there are no daycare expenses shared.

Search this forum...they are a few threads that some of the senior members have done a great job at outlining.

As the NCP you cannot make claim to the tax benefits, which is why you should be paying the after benefit amount.

[Human Way]

so i need to figure out how much of a tax credit she receives for this? Is it a certain line in the tax return? I did a search of daycare expenses and tax, with hundreds of search results. ill keep poking through them. if you have a link that would be great. thanks for helping!

[Unevenplayingground]

Hi,

It is the "net" cost of the childcare expense.

I did find this link for you from the program called DivorceMate, used by some lawyers (I believe there are a few other programs). The version I sent you the link to is for the layman's use. Lawyers use DivorceMate to help determine what cs should be and what each parent should be contributing to s7 expenses. I, personally, find it very useful.

Actual Cost of Special Expenses | My Support Calculator

I believe it can also be found under the federal child support guidelines, you would have to dig around:

Step 7: dealing with special expenses - The Federal Child Support Guidelines: Step-by-Step

I would really research it before you discuss it with her. For instance if you make more money than her, your prorata amount for s7 expenses would actually be more...keep in mind though that s7 uses your income, and her income (including cs).

Hopefully that helps you out!

[dinkyface]

I use this calculator: TaxTips.ca - Canadian tax calculator

I entered 30K income, single, in Ontario, with one 4yo child, and got total taxes with/without $2500 childcare expense deduction of $2267/$2642. I entered 2500 on the line titled 'Other deductions (child care, interest expense, etc.)'

That's a $375 reduction in taxes for her.

So your share would be (2500-375)/2=$1062.

But then there's also this (from here http://www.justice.gc.ca/eng/pi/fcy-...ep7-etap7.html)

"Michelle and Patrick agree that a day-care “net” expense of $450 a month is necessary. (The amount is “net” because they must consider the tax deduction Patrick will receive for child-care expenses, and the increase he will receive in the National Child Benefit.) '

CCTB online calculation results (1 child in Ontario, 30K income) - from this calculator here http://www.cra-arc.gc.ca/bnfts/clclt...lcltr-eng.html

$117.08 Basic monthly amount
$141.39 National Child Benefit Supplement monthly amount
$33.00 Ontario Child Benefit Monthly Amount
$291.47 Total monthly amount

[Mess]

Looking at my last return, it seems that the Child Care deduction is up to $4000 per child, so if you have two children the maximum deduction is $8000. This holds even if, say, a younger child requires $6000 and an older child requires $2000.

This is entered on line 214 on her tax return. then you want to look at her tax rate for both federal and provincial tax at her income level. If she is in Ontario and earning less than $39,020 then her combined federal/provincial tax is 20.5%.

If she claimed $8000, her refund for the child care would be $1640. In this case, the amount of child care actually paid would be $6360. The amount the NCP would pay would be a portion of $6360.

In your case, assuming she is in that same tax bracket, her refund would be $512.50 for the child care paid. You should receive $256.25. Alternatively, since the monthly averages $250, you should pay $100.

[Unevenplayingground]

Looking at my last return, it seems that the Child Care deduction is up to $4000 per child, so if you have two children the maximum deduction is $8000. This holds even if, say, a younger child requires $6000 and an older child requires $2000.

This is entered on line 214 on her tax return. then you want to look at her tax rate for both federal and provincial tax at her income level. If she is in Ontario and earning less than $39,020 then her combined federal/provincial tax is 20.5%.

If she claimed $8000, her refund for the child care would be $1640. In this case, the amount of child care actually paid would be $6360. The amount the NCP would pay would be a portion of $6360.

In your case, assuming she is in that same tax bracket, her refund would be $512.50 for the child care paid. You should receive $256.25. Alternatively, since the monthly averages $250, you should pay $100.

Hi,

I just looked it up, depends on age how much can be claimed.

TaxTips.ca - Child Care Costs

[Human Way]

[QUOTE=dinkyface;109491]I use this calculator: TaxTips.ca - Canadian tax calculator

I entered 30K income, single, in Ontario, with one 4yo child, and got total taxes with/without $2500 childcare expense deduction of $2267/$2642. I entered 2500 on the line titled 'Other deductions (child care, interest expense, etc.)'

That's a $375 reduction in taxes for her.

So your share would be (2500-375)/2=$1062.

Thanks for all the help. I tried using the above site but im a bit confused when it comes to the numbers.

1 child
90 K income
single in ontario
$2500 child care expenses

so i need to find out how much of a reduction that is for her?

[Unevenplayingground]

Hi,

I just found this:

It gives a good break down of what things you can claim for children and basically what it works out to as a credit:

7 important tax credits for families - Business - CBC News

[dinkyface]

I use this calculator: TaxTips.ca - Canadian tax calculator

1 child
90 K income
single in ontario
$2500 child care expenses

so i need to find out how much of a reduction that is for her?

Not sure exactly where you are getting stuck.

Step 1) Fill out this page, with HER details, with NO childcare costs. Look at the amount of tax owing. Should not be too difficult if you do your own taxes.

Step 2) Leaving all input fields the same, except now also enter 2500 in the childcare costs. Look at the amount of tax owing.

Step 3) Calculate the difference between these 2 amounts. This is the value of her tax credit.

[Mess]

I didn't see a line there for childcare costs.

Dropping the income from $90k to $87.5K, she paid $1085 less tax.

[OhMy]

In future tell the other parent that as of x date you will begin paying the day care your proportionate share yourself as you wish to also benefit from the tax deduction. (legally you have a right to also share the deduction). The day care can tell you in advance what costs will be and you can write or mail in checks. They can also then, by doing this give you seperate receipts which you can then each claim independently from one another.

[OhMy]

To do it the other way she has to do two tax returns. One she does without putting section 7 in and the other that she does and files. The difference of the two is the tax benefit from the section 7. From that amount you than calculate the % for your proportionate share and tfan that us what she owes you.