Who can claim child tax benefits?

[Jade]

Hi,
My soon-to-be ex wants to write down in the separation agreement that we should take turns in claiming the child as a dependent in tax return each year. So he claims the child as his dependent for one year, and I do the same next year.

I have the sole custody of the child. He pays child support.

1.
Is it legal-binding to put such a thing in the agreement? Or does the law say that only certain party can claim certain child tax benefits regardless of what our agreement is?

2.
My ex lives in US and pays tax only in US. If he claims the child as his dependent in US in a year, can I still get the child tax benefits that I'm entitled to in Canada in the same year?

Thanks a lot for any suggestion.

Jade

[logicalvelocity]

Jade,

as you mentioned,

My soon-to-be ex wants to write down in the separation agreement that we should take turns in claiming the child as a dependent in tax return each year. So he claims the child as his dependent for one year, and I do the same next year.

I have the sole custody of the child. He pays child support.

If your both living in Canada, CCRA would not allow such because a child support payor located in Canada is ineligible to make the eligible Dependant claim or aka equivalent to spouse amount. (Line 305) of the general tax return.

However, since they are located in the USA, the particular jurisdiction tax laws would apply to them. You may want to investigate further.

One thing to note:

Third party agencies and government ministries cannot be bound to the terms of a separation agreement as they have their own directives to follow. By having such clause as you mentioned in the agreement would not have any merit for that reason alone.



lv

[Jade]

I see.
Thanks a lot, lv!

[GGG]

what about split custody?

"If your both living in Canada, CCRA would not allow such because a child support payor located in Canada is ineligible to make the eligible Dependant claim or aka equivalent to spouse amount. (Line 305) of the general tax return."

What if I have split custody where the child, under 18, resides with me and the ex spouse has an "adult child" over 18 residing with them.

I pay child support based on the difference between what one person would pay for one child and what the otgher person would pay for one child.

[logicalvelocity]

GGG,

What if I have split custody where the child, under 18, resides with me and the ex spouse has an "adult child" over 18 residing with them.

Thats an excellent question. There was another discussion on eligible dependant amount (line 305) here:

http://www.ottawadivorce.com/forum/s...2008#post12008

http://www.cra-arc.gc.ca/E/pub/tg/50...l#P1111_145996

Line 305 - Amount for an eligible dependant

You may be able to claim this amount if, at any time in the year, you met all of the following conditions at once:

you did not have a spouse or common-law partner or, if you did, you were not living with, supporting, or being supported by that person;

you supported a dependant in 2006; and

you lived with the dependant (in most cases in Canada) in a home that you maintained. You cannot claim this amount for a person who was only visiting you.

In addition, at the time you met the above conditions, the dependant also must have been either:

your parent or grandparent by blood, marriage, common-law partnership, or adoption; or

your child, grandchild, brother, or sister by blood, marriage, common-law partnership, or adoption and either under 18, or mentally or physically infirm.

Notes

Your dependant may live away from home while attending school. If the dependant ordinarily lived with you when not in school, we consider that dependant to live with you for the purposes of this credit.

For the purposes of this claim, your child is not required to have lived in Canada, but still must have lived with you. This would be possible, for example, if you were a deemed resident (as defined under E and F in section "Which tax and benefit package should you use?") living in another country with your child.

Even if all of the preceding conditions have been met, you cannot claim this amount if any of the following applies:

You are claiming a spouse or common-law partner amount (line 303).
The person for whom you want to claim this amount is your common-law partner. However, you may be able to claim the amount on line 303.

Someone else in your household is making this claim. Each household is allowed only one claim for this amount, even if there is more than one dependant in the household.

The claim is for a child for whom you were required to make support payments for 2006. However, if you were separated from your spouse or common-law partner for only part of 2006 due to a breakdown in your relationship, you can still claim an amount for that child on line 305 (plus any allowable amounts on lines 306, 315, and 318) as long as you do not claim any support amounts paid to your spouse or common-law partner on line 220. You may claim whichever is better for you.

How to claim

If your dependant's net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) was:

$751 or less, claim $7,505 on line 305;

more than $751, but less than $8,256, complete the chart for line 305 on the Federal Worksheet in the forms book to calculate your claim; or

$8,256 or more, you cannot claim this amount.

Complete the appropriate part of Schedule 5, and attach it to your paper return.

Notes

You cannot split this amount with another person. Once you claim this amount for a dependant, no one else can claim this amount or an amount on line 306 for that dependant.

If you and another person both can claim this amount for the same dependant (such as shared custody of a child) but cannot agree who will claim the amount, neither of you is allowed to claim it.

In all I would have to say it deserves a call to CCRA to get a definite answer as their bulletin in respect to the deduction doesn't address split custody situations.

lv