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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 02-05-2010, 10:28 AM
jupiter_saturn jupiter_saturn is offline
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Default spousal support is tax deductible (?) how does this work?

Hi there,

maybe you can help me understand:

-spousal support is tax deductible, is that right?

-how does this work? I pay spousal support for 2010 for example, then in my tax return I file in 2011, I claim these as deductions?

-or can I reduce the amount of income tax deducted from each paycheque?

-what is the rate for the deduction? Does each dollar of support, reduce my taxable income by one dollar as well?

Thank you
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Old 02-05-2010, 10:55 AM
Foredeck Foredeck is offline
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For it to be taxable/deductible, it has to be a periodical payment, and not a lump sum payment. And, it has to be in writing, either by a court judgment or a signed separation agreement.

It'll be before line 150, not sure exactly which line it is. So, it'll increase her taxable income and it'll be a deduction for you.

The rate would depend on your salary. If you have a salary under about 40,000$, the rate would be 25%. Income from 40 to 60k is roughly 35%.

And, you could deduct the taxes from your paycheck. If you check with your HR department, they should have a TD1 form that you sign every year, and you can add all of your income tax deduction, and they'll make the proper calculations.

Also, she will have to claim it as income. If she doesn't, CRA may refuse it and you will have to appeal. It shouldn't be too much trouble, just time consuming.
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Old 02-05-2010, 11:28 AM
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dadtotheend dadtotheend is offline
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The deduction for you happens at line 220, after line 150. For your ex the inclusion happens at line 128, before line 150.

The tax rate is roughly 30% between income levels of $40K and $81K.

Here is the form you need to fill out to have your source deductions reduced to account for the deductible spousal support:

http://www.cra-arc.gc.ca/E/pbg/tf/t1213/t1213-04e.pdf. Be prepared to be required to send the CRA a copy of your court order/separation agreement.
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Old 02-05-2010, 11:35 AM
jupiter_saturn jupiter_saturn is offline
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O.K. then, so let's say I were earning $60K and paying $1K per month in spousal support. This means that I could arrange, for the income tax withheld each paycheque, to be reduced by $1000 x 0.3 = $300 (if we presume the incremental tax rate is 30%).

Thanks for the information.
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Old 02-05-2010, 03:39 PM
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Yes, if you are being paid monthly.
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Old 11-02-2012, 09:32 PM
sam666 sam666 is offline
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I know this thread is old, but I wanted to know that after you filled out all the required forms and source deductions have been approved then who does my employer give the money to? Does my employer transfer money to my spouse's bank account?
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Old 11-03-2012, 06:27 AM
standing on the sidelines standing on the sidelines is offline
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if i am correct, they only reduce the amount of income tax that they collect from you to pay the government. They are not deducting the amount of SS you are suppose to pay, you are responsible for that.
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Old 11-03-2012, 08:42 AM
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sam666, I think you have confused two different questions.

If you are dealing with the FRO, your employer pays the FRO (if it is set up that way.) There should be no contact between the employer and your ex.

The question here was about tax deductions. If the SS is a regular monthly payment, CRA recognizes it as a deduction. An earlier question was about adjusting the amount of tax that is withheld from the paycheck to reflect the lower amount of tax owed.
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Old 11-03-2012, 10:10 AM
sam666 sam666 is offline
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SS will not be registered with FRO. So if whatever 'standing on the sidelines' said is correct then that's fine. Can someone confirm this? I just need to know if my employer will transfer money to her or would I be responsible for paying her.

Also if I understand the procedure, I fill T1213 and send to CRA with separation agreement. If they approve it then I go to my employer with separation agreement?
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Old 11-03-2012, 11:08 AM
Berner_Faith Berner_Faith is offline
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Unless your wages are garnished, it is YOUR responsibility to pay the ex the SS
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