Legal Fees tax deductible?

[mcj2012]

Hi there,

has anyone claimed their legal fees on their taxes before?

My ex accepted a proposal to pay me back 30K in child support retro. Also, my child support going forward is going down drastically:-) with the new and TRUE income as a self employed!! whohoooo! Success!

My question is, we are in a shared parenting arrangement, we both pay child support. Since she has now increased her share of support (I still pay the delta), can I claim the legal fees from the past years? what are the conditions that CRA will allow this. Technically I did use the legal fees to ask for more support (which is the criteria right?)

Thank you!

[Tayken]

Best to read the tax code:

Line 232 - Legal fees

[HappyMomma]

It's actually Line 221 that you claim the deduction on.

I do believe you'll have difficulty claiming the deduction if you are the net payor though. I think only the recipient gets to claim it.

There's more info here under 'Legal Fees': http://www.cra-arc.gc.ca/E/pub/tg/p102/p102-e.html

[mcj2012]

Does that apply to shared custody, where both parents pay support? she has been asked to increase her support payments to me, although I still pay the difference.

I guess I may be SOL.

[Tayken]

It's actually Line 221 that you claim the deduction on.

I do believe you'll have difficulty claiming the deduction if you are the net payor though. I think only the recipient gets to claim it.

There's more info here under 'Legal Fees': Support Payments 2015

From your link:

Legal fees you incurred to try to make child support payments non-taxable must be deducted on line 232. For more information, see Guide P102, Support Payments.

[Tayken]

Does that apply to shared custody, where both parents pay support? she has been asked to increase her support payments to me, although I still pay the difference.

I guess I may be SOL.

There is jurisprudence that you can claim it but, it is hard to do. Some father actually challenged it and won. But, you have to go through the whole same process to make the claim. It didn't change tax law / code.

Search this forum there are threads about it.

[thefunone]

The payor cannot claim legal fees...had huge fight with CRA when I noted that Ex claimed over 60K in legal fees. I was not allowed to claim anything. Answer from CRA - "Sorry sir but that's the law"
My argument was that legal fees were incurred because ex what a crazy rate of CS. I couldn't afford that so had to arbitrate same. Even though I have to pay less - because I still end up being the payor and she is receiving the CS - she can claim - I cannot

[notdeadyet]

Does that apply to shared custody, where both parents pay support? she has been asked to increase her support payments to me, although I still pay the difference.

I guess I may be SOL.

The key is in the wording of your agreement or order. If it's appropriately worded that you pay support and the other parent pays you, resulting in you paying a net offset then you should be fine. I have the same situation and yes you can deduct legal fees that are incurred in relation to obtaining child support but they will come knocking for documentation.

From experience you should anticipate a review notice the first year or two of making such a claim. The second time they reviewed this I obtained a letter summarizing fees. The total legal fees were actually slightly higher than I'd claimed and they reassessed me, sending me an additional refund.

This is a good article on the topic:
Child Support Payer can Deduct Legal Fees spent on Child Support Bid - Canadian-Lawyers.ca

[mcj2012]

Ex intends to claim her legal fees as well and will probably succeed. Even tho we are a shared custody and use set off method and the whole reason I took her to court was because she lied about her income and in the end she had to increase her set off amount of income (double the amount she originally claimed). I am still net support payer but a much smaller CS per month. Yet she gets to claim her legal fees, seems unfair since I took her took court for lying about her income and when the truth came out her share had to increase. wow! Guess I won't bother trying now as I just can't handle anymore fights CRA or with the EX. I am honestly beat after 2.5 years of fighting and almost 40K in legal fees.

[thefunone]

I hear ya - Going on 5 yrs for me - and probably double the legal fees.
Stay strong.