Ottawa Divorce .com Forums


User CP

New posts

Advertising

  Ottawa Divorce .com Forums > Main Category > Financial Issues

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

Closed Thread
 
Thread Tools
  #1  
Old 09-09-2011, 02:29 PM
shellshocked22 shellshocked22 is offline
Senior Member
 
Join Date: Jan 2011
Posts: 312
shellshocked22 is on a distinguished road
Default Equivalent to married tax credit

Hi Folks:

Ok, my ex and I will be each having 50% custody of our two children. My question is with regard to the "equivalent to married" or "dependent" tax credit which is a little over $10,000 (since a tax credit, worth about 15-20% of tax savings or around $2,000).

Normally, if one partner pays child support they lose this valuable tax credit. However, if 50% sharing of the kids, and if both partners work and hence pay child support - even is offset basis, then it meant that neither would get the tax credit. REv Canada revised this unitended consquence by clarifying that in this scenario, each partner could claim one child for the equivalent to married tax credit.

My question is, I qualify for this EXCEPT my spouse at this point is not working. She's trying to find a job but no luck yet. Let's assume she doesn't get a job, does that mean that I don't get the "equivalent to married" tax credit ?

If so, is there is a minimum amount of income she needs to make or even $1 a year ? If so, would it work if she agreed to even a nominal inputed amount of income (say $1,000 a year) just to satisfy the rules.

This is a signficant potential tax savings for me so any help is appreciated.

Thanks
  #2  
Old 09-09-2011, 02:38 PM
Mess Mess is offline
Senior Member
 
Join Date: Aug 2009
Location: Toronto
Posts: 5,448
Mess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the rough
Default

I'm not sure why you think this doesn't apply because she is not working?

Are you saying she has no income and so you are paying full CS instead of the setoff amount?

You should be paying the setoff amount compared to her imputed income, what she should be capable of earning.

Whether she has income or not, she should then be considered to be paying you child support.

Compare this to the scenario, if she had full custody and you weren't working. She would sure as hell expect you to pay support, and so would the courts.
  #3  
Old 09-09-2011, 04:44 PM
shellshocked22 shellshocked22 is offline
Senior Member
 
Join Date: Jan 2011
Posts: 312
shellshocked22 is on a distinguished road
Default

Thanks Mess. I understand what you're saying re inputed income. HOWEVER, there are a couple of reasons why I am not being aggressive in going after "inputed income" for her....

-my lawyer indicates that since she has been a stay at home mom for quite a few years, the courts will be unlikely to inpute income for at least a couple of years.

-to date, she has been quite reasonable in negotiating a settlement on various issues and so given the small amount of money involved in inputing minimum wage to her, I don't feel comfortable playing "hard ball" on this topic

So, given that we both have 50% custody, albeit she is not currently working, do you think I would qualify for the children's tax credits (in particular the "equivalent to spouse" tax credit ?

My accountant has an interpretation from CCRA saying that if both parents of two kids have about 50% custody AND "both are paying offset child support" then each can claim one child. Problem is she isn't working right now.

Your thoughts ?

Thanks
  #4  
Old 09-09-2011, 07:55 PM
Mess Mess is offline
Senior Member
 
Join Date: Aug 2009
Location: Toronto
Posts: 5,448
Mess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the rough
Default

My thoughts are that I would ask my lawyer to show me the specific court cases where the judge refused to impute an income to someone who was earning $0. If find this absurd and I can't find an instance on Canlii. That doesn't mean there aren't any, but my own lawyer made a number unsupported statements like that, it does happen.

You are paying full table support, plus supporting the children 50% while they are with you? Your ex is a deadbeat. You are paying 50% too much CS and as well you are missing the available tax deduction.

If your ex were "paying" even $10 a month in setoff, you wouldn't be running into this technicality. If you are willing to forego the small amount of support she should be "paying" (setoff) you also have to be willing to forego the tax credit.
  #5  
Old 09-10-2011, 06:39 AM
staysingle staysingle is offline
Senior Member
 
Join Date: Mar 2011
Posts: 485
staysingle is on a distinguished road
Default

Are you recently separated? Are you currently negotiating your separation agreement?

How has spousal support been resolved?
  #6  
Old 09-13-2011, 03:38 PM
KnotUntied KnotUntied is offline
Member
 
Join Date: Nov 2009
Posts: 31
KnotUntied is on a distinguished road
Default

Same situation here in the sense that there are 2 kids, 50/50 custody, paying offset amounts of CS. However, CRA will not accept the fact that there is an offset amount of CS being paid because it is not specfically described that way in our Separation Agreement or more recent Court Order. CRA is telling me that they will not accept that there is an offset CS payment situation unless it is written in a document that has been filed with the courts.

They wrote...
"we are unable to adjust your return for an Eligible Dependant as you are required to pay support payments for your child(ren) as stated in the Court Order dated... The order does not state that there is an "off-set" amount where your spouse is to pay to you any child support. The order only states that the parties will share the costs of the children's "special or extraordinary expenses". We would also required a revised order that is signed by the Court or stamped by the court indicating that there is an off-set amount in effect".

I have asked them to look our incomes and the CS tables and do the simple math. How do you think we came up with $XXX per month? No luck. They're sticking to their guns on this.

The most frustrating part is that my ex is not willing to cooperate because she doesn't understand it, so she assumes I am trying to pull something. Without her cooperation, it would seem that revising the existing court order would be impossible.

It was an eye opener for her to find that the Spousal Support amounts she receives from me dropped as a result of my inability to make the eligible dependant claim (I was able to last year because it was our year of separation). A plus for me in that SS went down some but...in the end...it's money in the CRA's pocket that we could be spending on the kids.

Anyway, your logic is correct in that you should both be able to claim 1 child as an eligible dependant. But good luck to you if you don't have the off-set payment situation described in any of your court documents. Let me know if you find otherwise please.
  #7  
Old 09-13-2011, 03:49 PM
Mess Mess is offline
Senior Member
 
Join Date: Aug 2009
Location: Toronto
Posts: 5,448
Mess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the rough
Default

You file a simple motion to change the order, your affidavit explains why with the supporting documentation from the CRA attached. It doesn't matter if you ex disagrees, there is no loss of payment to her, it is just a necessary rewording of the order/agreement. You will get an order signed by a judge, if your ex fights you she will pay your costs.

You should actually be able to write it up yourself. If you need help, just ask here.
  #8  
Old 09-13-2011, 04:09 PM
KnotUntied KnotUntied is offline
Member
 
Join Date: Nov 2009
Posts: 31
KnotUntied is on a distinguished road
Default

Oh...uh...OK!

Thanks for the info. I will get working on this.

Much appreciated Mess!
  #9  
Old 09-29-2011, 04:34 PM
MikeAtWork MikeAtWork is offline
Junior Member
 
Join Date: Dec 2009
Posts: 10
MikeAtWork is on a distinguished road
Default

I received my audit results from the CRA today and I was told that I cannot claim the AMOUNT FOR AN ELIGIBLE DEPENDANT (line 305) and AMOUNT FOR CHILDREN BORN IN 1993 OR LATER (line 167) for the same reason: "You cannot make a claim for a child when you are required to make support payments for that child at any time in the year".

I'm in the same boat as KnotUntied (except 4 kids): 50/50 custody, paying offset amounts of CS, and as you can see: denied by CRA (sometimes I wonder if they have quotas to fill). The difference here is that we have an SA that was signed by the lawyers but was never taken to the courts.

My question is: do I simply need to get my ex and myself to put in the word "offset" somewhere in the SA and sign it off? How is this done?

Also: I didn't think "Line 167" was dependant on CS. Am I missing something?
  #10  
Old 09-29-2011, 06:59 PM
Mess Mess is offline
Senior Member
 
Join Date: Aug 2009
Location: Toronto
Posts: 5,448
Mess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the roughMess is a jewel in the rough
Default

MikeAtWork, follow what I say to do exactly.

Go to the CRA website here, What are the situations in which you cannot claim the amount for an eligible dependant?

Have that page open when you call the CRA helpline.

Quote the following:
Quote:
Note
If you and another person were required to make support payments for the child for 2010 and, as a result, no one would be entitled to claim the amount for an eligible dependant for the child, you can still claim this amount provided you and the other person(s) paying support agree that you will be the one making the claim. If you cannot agree on who will claim this amount for the child, neither of you can make the claim.
You ask them what this means and for whom it is meant to apply.

They will have to answer you.

You then explain that you and your ex spouse each pay the set-off amount of child support.

You then explain that you were refused the deduction.

You then ask what your recourse is.

If the clerk on the phone doesn't know, ask that your call be escalated to a supervisor.

When you get an answer, ask to whom you are speaking because when you follow up you will need to back up your claim.
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Child Tax Credit and Spousal Credit in shared custody hubby Financial Issues 65 10-08-2012 11:53 AM
dividing property-related bills like taxes and credit line interest onedayatatime Financial Issues 6 10-14-2011 01:12 AM
need an advice before I will start divorce procedure Maby Financial Issues 1 05-26-2009 11:26 PM
Equivalent to Spouse Tax Credit malvina Financial Issues 1 03-06-2007 06:13 PM
Equivalent to married notstepdad Divorce & Family Law 1 10-11-2006 07:21 PM


All times are GMT -4. The time now is 06:39 AM.