Does anyone know if you have to pay taxes on settlements from family law matters? If you are able to settle equalization payment, spousal support, or child support, etc without going to trial are these monies taxable?
Announcement
Collapse
No announcement yet.
Taxes on settlements
Collapse
X
-
https://devrylaw.ca/tax-treatment-of...y-law-matters/
"Tax Treatment of Family Law Legal Fees
In certain circumstances, legal fees incurred in the context of family law litigation are tax-deductible. Under Lines 221and 232 of your tax return, the following legal fee expenses can be deducted by a support recipient from their income:
Legal fees incurred to establish entitlement to spousal or child support;
Legal fees incurred to increase the amount of spousal or child support payable;
Legal fees incurred to claim retroactive spousal or child support or to enforce arrears of support;
Legal fees incurred to try and make child support non-taxable."
Comment
-
https://www.canada.ca/en/revenue-age...ents.html#toc9
See 3.81... it just says support, which is encompassing.
I think your accountant is incorrect Stillbreathing... but I am not a tax expert.
Comment
-
Absolutely legal fees to enforce and to defend spousal support are tax deductible. Even though I was successful and awarded costs for a minuscule portion, I had MANY years' worth of legal and 100% was tax deductible. Even if you are unsuccessful i believe they are 100% deductible. I recall CRA requested a letter from lawyer pretty much every year which was no big deal.
Comment
-
-
Originally posted by Tayken View PostIn the case of offset child support claim do both parties get denied the tax claim as they both are support payers?
I would not be surprised though if they would decide that neither party gets the tax claim.
Comment
-
Originally posted by arabian View PostAbsolutely legal fees to enforce and to defend spousal support are tax deductible. Even though I was successful and awarded costs for a minuscule portion, I had MANY years' worth of legal and 100% was tax deductible. Even if you are unsuccessful i believe they are 100% deductible. I recall CRA requested a letter from lawyer pretty much every year which was no big deal.
Sent from my ONEPLUS A5010 using Tapatalk
Comment
-
Originally posted by rockscan View PostThey are tax deductible for a recipient not a payor. If you had to pay a lawyer to help you receive support then you get a tax deduction on certain legal fees and your lawyer will provide the breakdown in a bill for your taxes.
Sent from my ONEPLUS A5010 using Tapatalk
Comment
Comment