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

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  #1  
Old 03-12-2018, 09:46 PM
Futureisbright Futureisbright is offline
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Default Daycare Expenses 50/50 rather than proportional

We are finalizing SA and her lawyer put in proportional daycare costs though I’d told her it needs to be 50/50 as I’d already created an arrangement with my work that enabled me to avoid need for after-school care during my weeks.
Since getting every 2nd week care is impractical and my solution at work wasn’t very sustainable I figured 50/50 was fair.
My STBX wants to go back to school thus leaving her with no income (she’s agreed to 25k imputed for calculating CS).
Looking for feedback on best strategy to get her lawyer to agree to:
1) proportional up to max 70/30 split whether childcare is to allow for work or for Souly for schooling between March 2018 and October 2019
2) proportional when childcare is to enable employment; 50/50 if it is to enable schooling between March 2018 and October 2019
- SA currently contains std wording “care for the purposes of allowing him/her to work”
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Old 03-12-2018, 10:48 PM
denbigh denbigh is offline
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I thought section 7 was always proportional. so 50/50 only if you make the saem amount
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Old 03-12-2018, 11:10 PM
Futureisbright Futureisbright is offline
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I’m sure it’s always meant to be proportional. I guess another way of phrasing my question would be: has anyone had success putting a different ratio in their SA?
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Old 03-13-2018, 09:13 AM
rockscan rockscan is offline
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If its 50/50, who gets the tax benefit? If the lawyer is pushing for proportional then figure out your share after she takes the tax benefit. More than likely that cost will be around the 50/50 or you could simply say proportional cost of day care during her time with the kids. That way you arent getting daycare on your time but you still meet the s7 requirement of daycare for her to prepare for employment.
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Old 03-13-2018, 12:08 PM
Futureisbright Futureisbright is offline
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Thanks Rockscan I think that’s a good solution: Proportional but I get 100% if tax benefit. I’m sure she’ll agree to that and this would come off a 43% marginal rate so will be significant deduction.
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Old 03-13-2018, 12:21 PM
rockscan rockscan is offline
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Be careful though. More than likely she will get the tax benefit (which would be better due to her lower income) but that still lowers the cost.

Normally s7 expenses are calculated as the proportionate share of the net cost. So if daycare was $1000, the tax benefit was $200, you would split $800 proportionate to income. If you were simply splitting 50/50 then you would each have a $500 bill.

Also, make sure if you dont need daycare you arent paying for it. Some daycares require you to pay full price or a higher price for part time. Read the fine print in the contract before agreeing.

Also see if she gets a daycare subsidy based on her income/returning to school. That would come off the price you pay too.
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Old 03-13-2018, 02:55 PM
Futureisbright Futureisbright is offline
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Okay,
So I guess the question is:
Can I claim 100% of childcare cost (so long as she doesn’t put it on her return)
or does it need to be claimed 50/50 based on assumption that we use it 50/50
or does it need to be claimed based on how paid (e.g. proportional 80/20)?
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Old 03-13-2018, 03:20 PM
rockscan rockscan is offline
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Im not an expert but I believe that only one of you can claim the tax deduction and that person is the custodial parent in most cases. I think for 50/50 off set, some agreements state you switch off the tax deductions every other year.

Are you in a situation where only one of you claims the child? If yes then the person who claims the child takes the amount of the tax deduction off the cost and then you split proportionate to income.

Based on some of the difficulties expressed on here by others, getting CRA to understand the split is next to impossible. You may want to just keep it easy and have one person make the claim every year.
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Old 03-14-2018, 12:07 AM
Futureisbright Futureisbright is offline
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I have trouble with paying proportional after calculating tax deductions as that would allow her to gain from me being in a high tax bracket and still allows her to gain by having highest offset possible thus not creating any inclination to get a dang job.
I hope I can pay proportional and then take all deductions after the fact and keep as my own. I hope to get precisely that put into separation agreement.
She hasn’t even read it, she just told me to go ahead and mark up with whatever I want and she’ll sign when I’m happy. I just need to get her lawyer to feel the same way
Maybe in SA I can word it as: any child for which ongoing regular child care expenses are being paid will have 100% of child care tax deductions claimed by (me).
Once each child is of the age that ongoing child care is not required they alternate years as to which spouse can claim as a deduction.

Right now is when we have highest child care costs (4,5,7) and right now she has zero income (returning to school) and I have 100k income.
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Old 03-14-2018, 12:24 AM
kate331 kate331 is offline
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Would your ex not qualify for subsidized daycare given that she is going back to school and does not have an income?
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