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  • Tax Time: When Is A Child A Dependent?

    My husband cannot claim his son as a dependent on his taxes because the child does not live with us primarily. Is this correct?

    This is what we had been told by a lawyer several years ago, especially since my husband was paying his share of daycare costs to his son's mother, on the basis that she would share her child care tax refund with him in the same proportion that he paid towards the expense.

    However, my husband has begun paying daycare feels directly to the daycare, and will be getting a tax receipt for 2010. Will he then be able to claim the child as a dependent?

    When can a "non-custodial" parent claim their child a dependent?

  • #2
    dadtotheend can probably give you a firm answer.

    AFAIK your husband can't claim the child as a dependant for equivalent to spouse, first of all because he has you, and second of all because he doesn't have at least 60/40 custody.

    The child care is a deduction if it is required to allow you to work. As I understand it, your husband is paying child care while the child is with the mom, yes? As his share of section 7. But this isn't necessary for HIM to work.

    If you have the child for, say, the summer months and pay for child care then but don't have shared custody, then I think you could get challenged but you would be able to justify it at an audit because the child was living with you. You should have records to show that.

    Comment


    • #3
      General Income Tax and Benefit Guide - 2009 : Federal non-refundable tax credits (Schedule 1) for eligible dependant claim.

      General Income Tax and Benefit Guide - 2009 : Federal non-refundable tax credits (Schedule 1) for Amount for children born in 1992 or later.

      General Income Tax and Benefit Guide - 2009 : Deductions (Net income and Taxable income) for child care expenses claimed at line 214.

      Shared Eligibility for shared parenting and Child Tax Benefit.

      If the child's primary residence is with Mom and your ex is paying CS, your husband\s claims will be limited as you will see when reading the links above.

      The rules have change in recent years. Don't rely on what a family law lawyer told you about income tax, especially when it was years ago before the rules changed.

      Comment


      • #4
        Thanks Dadtotheend.

        I read over the information in the links you posted... and feel more confused now than when I started, LOL!

        Perhaps if I explain our situation, you - or someone else - can help my husband and I understand how to handle his taxes.
        • Child is 7 years of age.
        • Mother and Father of the child never lived together.
        • Mother and Father have joint custody.
        • Mother has primary residence, with Father having every-other-weekend access and 50% vacation (time off school).
        • Father pays child support according to guidelines.
        • Mother and Father pay child care expenses separately, directly to the child care provider, according to proportionate share.
        • Father pays 100% of daycamps and extra-curricular activities the child is enrolled in during his access and vacation time.
        • Father contributes proportionately to daycamps and extra-curricular activities the child is enrolled in while in the Mother's care.
        Based on the above information, can my husband make any deductions on his T1 General? If so, which ones and how?

        Thanks in advance for your help.

        Comment


        • #5
          He can claim daycare/camp paid when the child is living with him.

          He can not claim daycare paid when the child is living with mom.

          Depending on the type of camp, if it qualfies as "athletic" (pretty loose rules) he can claim some of the camp costs as the sports dedection (forget the exact name). This is only worth it if he has exceeded the possible total deductions for childcare.

          Comment


          • #6
            Thanks for the reply, Mess.

            From what you say (which makes sense and coincides with what I managed to understand from all the tax rules Dadtotheend posted) it seems that there is just no way (or no point) in my husband claiming his son as a dependant. (A $30 refund is not worth the time trying to justify that he has the right to claim his son, KWIM?)

            So my question is now more specific.

            In previous years, the daycare provider would bill the child's mother the full cost of child care. She would forward a copy of the invoice to my husband, who would reimburse her his proportionate share.

            In the court order, it specifically states that daycare costs are to be shared proportionately on the basis that the mother share her child care tax refund with the father in the same proportion that each paid toward the expense.

            This was fine by us.

            However, this past January, the mother claimed that she "cannot afford" to cover the full cost of daycare and be reimbursed at a later date, and demanded that the daycare provide each parent with a separate invoice based on their proportionate share. The daycare had no problem doing so, and as a result my husband receives monthly invoices for his percentage of the total costs, and pays the daycare directly.

            When we set this up, the daycare director told us that in February 2011, my husband will also receive a tax receipt for his daycare expenses, based on the amount he paid directly to the daycare.

            From what I've read here (and on the CRA website)... it appears that there is no point in my husband receiving this tax receipt as he will not be able to claim the child on his taxes.

            Do you think it would be best to ask the daycare director to issue one receipt only to the mother, indicating on it somewhere (or in an attached letter) how much each parent paid? This way, the mother will claim the daycare costs on her taxes, and will - according to the court order - have to share her refund with my husband in the proportion they each paid, according to the letter from the daycare provider.

            Does that make sense?

            Can that be done?

            As for the daycamps and extracurricular activities... I guess it'll just be another "water under the bridge" issue. We're happy to be able to provide the child with opportunities to develop various skills, and that's what matters... not whether or not it can be claimed as a tax refund. No point in stirring things up.

            Comment


            • #7
              Doesn't she get child care subsidy?
              How much does your husband you actually pay in daycare costs?
              How would she determine how much $$ of her tax return, she is supposed to give him...especially if she is low income (subsidy)??

              Comment


              • #8
                I'm not sure how much you pay for daycare, and I think I remember she get's subsidy.

                There is a limit to how much a parent can claim per child for child care each year. We were over the limit each year and only claim a portion of our child care receipt. I'm not sure what the limit is now (our youngest is in SK and we "only" spend about $6k a year on child care now.) It used to be $7k. So the question is, is the mum already near the limit? Is it really worth screwing around with this?

                The daycare, particularly a licensed daycare that receives subsidy from the government, has to follow a set of rules that would be as thick as phone book. The don't like to screw around, although I'm sure you'll find some admins that will make an exception. But count on them following the rules.

                If your husband is paying directly, the law would say that any tax receipt goes to him, whether he can use it or not.

                I think going forward, your best solution is to pay the mother directly each month for daycare, mark the cheques "For daycare", let her pay the full daycare and get the full receipt and then follow the court order.

                You are faced with the daycare having to follow the law, keep records, report to their subsidy administrator and dot the 'i's and cross the 't's. I know that our daycare admin wouldn't go for something like handing all the receipts to the mom, if she knew already the couple weren't together.

                Comment


                • #9
                  The child's mother isn't low income. She obtained subsidy as a "young, uneducated, single mother" and still receives it. Each year, we hear "I may not have subsidy next year."

                  Either way, subsidy or not, daycare costs need to be paid for, and shared between parents.

                  The court order states that all daycare costs shall be split in proportion to income, with the mother to share her child care tax return with the father in the same proportion that each of the paid toward the expense. (For example, if my husband pays 50% of the daycare costs, then he is entitled to 50% of the child care tax refund she receives.)

                  Because we started paying the daycare directly this year, we are trying to find a way to still abide by the court order, as it is written.

                  Asking the child's mother if my husband can pay his share directly to her instead of to the daycare will be a futile effort, as it was her that contacted the daycare and told them to start billing them separately. When my husband called to inquire about why he was being billed, the daycare director explained that upon the child's mother's request, they will be billing them separately according to their proportionate shares, and that my husband will receive a tax return for his payments.

                  Seeing as my husband cannot claim his child as a dependent, the tax return is useless to him.

                  So we're trying to find a way to still be able to claim and receive some of the refund, as per the court order.

                  I hope that makes things a little clearer.

                  Comment


                  • #10
                    It was perfectly clear to me to begin with. I understand your problem. But you are, no offence, looking for a way to commit tax fraud. She can only claim the expenses she paid for. You can't transfer your receipts to her any more than you can transfer them to me.

                    I brought up the issue of the subsidy to point out that subsidies are administered by goverment agencies (here, by the municipality even if the funds are a mix of local, provincial and federal) and the agency requires the daycare to follow a strict set of rules.

                    It would be a different story if you were using a babysitter down the street that just took in a couple of kids into her living room and wasn't licensed. She'd probably give you any receipt you wanted.

                    You ran headfirst into those rules before when you had to pay for the cost of daycare on your vacation. The daycare has to charge her for the care even if the child isn't there to keep the spot secured. These are the subsidy rules. There are a ton of rules and they require meticulous records and disclosure.

                    The daycare administrator has to abide by the rules. You can go to them and try to get the receipts changed. They may be willing to do it under the table, but I sincerly doubt it, our daycare admin wouldn't touch a request like that. But if you are good friends or something, I don't know...

                    With the wide age range of our children, we've been using licensed daycare for almost 12 years now. We've been there daily for that time, dealt with different admins, applied for subsidy ourselves, had various issues over the years, dealt with splitting tax receipts etc. You're asking for advice, I'm giving you my experience.

                    Comment


                    • #11
                      No, I get it. Thanks Mess.

                      I just hoped that maybe someone was in a similar situation and would have an answer. I guess the best bet would be to contact the daycare director and see if she has any suggestions.

                      Thanks again.

                      Comment


                      • #12
                        why not get the taxes done by a tax lawyer this year that way they know all the ins and outs of what you can and cannot do

                        Comment


                        • #13
                          Originally posted by frustrated11 View Post
                          why not get the taxes done by a tax lawyer this year?
                          $400+/hour

                          Comment


                          • #14
                            wow I didnt realize they cost so much, maybe I'm in the wrong trade

                            Comment


                            • #15
                              So what you are saying is that Mommy dearest violated the court order by directing the daycare to bill separately?

                              In any event, she'll get less of a refund doing it this way anyway.

                              Comment

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