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  • claiming eligible dependant on shared custody

    are there any tax accountants on this forum?

    I was in a conversation with another dad and I promised to ask this question on this forum. He has an separation agreement with his ex. Because they have his children 50/50, on it they agreed that each parent will claim one child each and alternate. However, he just got remarried and his accountant says that his new wife has to claim his kids because she is the lower income in the house hold. first of all is this correct?

    His Agreement says "Father shall claim on his tax return child 1 as an eligible dependent in even number years and mother shall claim child 2 as an eligible dependant on odd number years...".

    Can he let his new wife claim this as she is part of the household. His ex argues that it is not what the wording in the agreement says, so she will go ahead and claim both children next year since he can't.

    any comments on who is right or wrong?

    thanks

  • #2
    ^

    I have seen situations where a step parent was used to claim the eligible dependent child tax, due to the fact that the bio parent married to the step parent earned more money, so they decided to use the step parent to claim.

    In your particular case, if the ex goes ahead and claim the 2nd child on top of what she is already claiming, all "your friend" has to do is also go ahead and claim the 2nd child. CRA will reassess both of them once they find out, and the ex will have to pay back that money, or have it deducted from her future entitlements.

    It's that simple

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    • #3
      I told him that he probably could, but the wording on his separation agreement doesn't allow it. It says "father claims" the new wife is not considered in the wording. So this might screw him.

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      • #4
        claiming eligible dependant on shared custody

        Originally posted by JRSDad View Post
        I told him that he probably could, but the wording on his separation agreement doesn't allow it. It says "father claims" the new wife is not considered in the wording. So this might screw him.


        BUT, they are filing their taxes together so technically he is claiming it on his taxes they are just combined to maximize tax benefits. If they filed separately then he would claim it himself.

        Why did he even tell his ex they were filing that way? The less she knows the better. Bottom line is hes claiming the credit, how he claims it really isnt her business.

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        • #5
          I agree with Rockscan. He is claiming it, just claiming it in the way CRA demands due to his remarriage.

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          • #6
            You know, I asked him the same question "what she don't know won't kill her". but he said they exchange full tax returns, so she would see that it was missing from his return for next year, he gave her a heads up he said. lol...I still wouldn't have said anything. but thanks for the other view on it, it makes sense!

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            • #7
              claiming eligible dependant on shared custody

              Then what he does is tell her that hes claiming it on his household taxes and if she tries to claim it in his year he will report her to CRA for a full audit. That might shut her up.

              ETA he can also add that nothing in their agreement says either one can claim the credit for the others year so shes really using an invalid argument. If he chooses not to claim it in his year, their agreement doesnt say that means she gets to claim it.
              Last edited by rockscan; 06-15-2016, 02:04 PM.

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              • #8
                If he's now married, he can't legally claim the "amount for eligible dependant".

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                • #9
                  But his new wife can is my understanding.

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                  • #10
                    Originally posted by JRSDad View Post
                    But his new wife can is my understanding.
                    We really need a tax person to join this board. There are so many unanswered questions about taxes and children after divorce.

                    Comment


                    • #11
                      This is a little late however in case someone comes to this thread looking for an answer in the future:

                      You can ONLY claim an eligible dependant when you are single. The wife cannot claim the child as an eligible dependent as she is not single.... HOWEVER there are children credits and amounts you can get for claiming a child. It is slightly different however there is still benefit.

                      Also, might I add that the ex cannot claim both kids as eligible dependants either. You can only claim 1 child as the eligible dependant even if you are single with full custody of 6 kids.

                      The fact that the court order states only for the purpose of an eligible dependant sounds odd to me as that is not the only benefit you get for claiming a child on your tax return.

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                      • #12
                        OK, although this is old I will add my 2 cents...

                        I think OP's friend was a bit confused to start, relative incomes have no bearing on who claims dependant credits and in many cases it is better to have higher income spouse claim. It is child care expenses that must be claimed by lower income spouse, that may be what accountant had been referring to.

                        Generally each parent can claim eligible dependant credit every year if more than 1 child and 50/50, suspect the alternating provision could have to do with relative ages of children (until they both turn 18). They just can't claim the same kid in any year. Also there is a limit of one such credit claim per household, so there is no possibility that the ex could claim both, furthermore the dependant child credit (that was per child) no longer exists.

                        If friend just got remarried then this was his last year for eligible dependant credit, it requires that taxpayer was single at some point in the year, and he may have been....

                        What the friend needs to do is make sure he has applied for Child Tax Credit, most fathers aren't in that part of the CRA system as it defaults to mom upon birth of a child. If shared custody then he is entitled, but it is not automatic, and often the mothers neglect to inform CRA of shared custody, such that the benefits are overpaid

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