After Tax Value for extracurricular activities

A

almostdivorced2017

New member
Hi all,

I am paying for childcare. My ex has to pay his part and he is calculating his share based on "after tax value" and then based on our incomes.
Can't figure out why "after tax value"? Thank you!
 
Its called "net cost". One parent received the tax benefits which are to be applied to the activity to determine the other parents cost. Its easier to subtract the tax benefit from the cost and then determine proportionate share.

For instance, daycare costs $2000 per year--tax benefit is $500--amount to split proportionate to income would then be $1500.
 
Yes thats how its done. Unless there are other credits too.

This works for child care, medical and education costs too. Anywhere there is a tax credit, you are obligated to take it off the cost and then split from there.

The reasoning is that in an intact family, both parents are eligible for the tax credit by filing together. When you divorce only one parent is eligible or the benefits each year.
 
I have reason to believe my ex wife's husband claimed the sports tax credits over the past few years. It certainly isn't on her income tax returns.

How do you go about finding out what they received to figure out my share?
 
Also braces....we have spent nearly $10,000 on 2 kids in the past year...surely sh got money back for those during tax time? I wouldn't know cause she does not provide me with her returns.
 
There you should be telling her you want copies of her taxes before you agree to any expenses or determine your proportionate share. OR you do a fake return yourself with the info you have (her income--make the other stuff up) and see what you get. OR you add the expenses to your return and see what you get and tell her without disclosure you determine the tax benefit to be x amount and calculate it that way.

Unless she makes less than $50000 a year the medical expenses after benefits coverage need to be over $1500. If you dont have coverage then it will work but most benefits companies pay about $2000-4000 per kid.
 
Thank you for the info re: tax credits.
Next question - my ex has submitted daycare expenses to me (itemized monthly), and then states "The after-tax value of the costs paid is 0.65 per 1.00....". I am being asked to pay my proportionate share of the "after-tax" calculated value.
I do not understand what this "after-tax value" means. On the surface, it seems "good" because it is reducing the costs that are being assigned to me, but I would like to understand how/why it is being calculated in the first place.
 
rockscan said:
There you should be telling her you want copies of her taxes before you agree to any expenses or determine your proportionate share. OR you do a fake return yourself with the info you have (her income--make the other stuff up) and see what you get. OR you add the expenses to your return and see what you get and tell her without disclosure you determine the tax benefit to be x amount and calculate it that way.

Unless she makes less than $50000 a year the medical expenses after benefits coverage need to be over $1500. If you dont have coverage then it will work but most benefits companies pay about $2000-4000 per kid.
Click to expand...

My ex and her spouse don't even make $50,000 combined. Far as I know she makes 10,000 a yr disability. And in prior years only made ~$20,000 working part time.

I have seen her past tax returns through this latest motion disclosure there are no tax deductions for any sports for any of the kids or medical. That's why I believe her husband claimed them. Also haven't seen her 2016 return she failed to provide it in disclosure or to give them to me before June 30 so don't know if she claimed braces yet.
 
almostdivorced2017 said:
Thank you for the info re: tax credits.
Next question - my ex has submitted daycare expenses to me (itemized monthly), and then states "The after-tax value of the costs paid is 0.65 per 1.00....". I am being asked to pay my proportionate share of the "after-tax" calculated value.
I do not understand what this "after-tax value" means. On the surface, it seems "good" because it is reducing the costs that are being assigned to me, but I would like to understand how/why it is being calculated in the first place.
Click to expand...



Who gets the tax benefit? Is your proportionate share 65%?
 
It doesn't matter who in her house claims them, you still pay the after tax benefits cost according to your proportionate share.
 
almostdivorced2017 said:
I do not understand what this "after-tax value" means. On the surface, it seems "good" because it is reducing the costs that are being assigned to me, but I would like to understand how/why it is being calculated in the first place.
Click to expand...

Your ex should be claiming this on her taxes, because the lower income partner is supposed to make the claim. So unless her husband makes less than she does, it isn't him claiming it.

But anyways, here's what it looks like, with some made up numbers. There are caps, but since I'm making up the numbers I'm going to pretend they are under and not worry about it.

Say the daycare expenses are $2000 a year. Your ex claims that in her taxes, and it makes a difference of $300 for her refund. So the after-tax cost of daycare is only $1700. That's the part that gets shared between the parents.

Say the sports expenses are $700. Let's say that including this expense makes her refund $150 higher. So really, the sports only cost $550.

To get these numbers, people do a pretend tax return without the claims and then with them, and compare the results.

If she's not providing you with her tax returns so you can verify her claims and check the math to make sure she's done it right/honestly, then request them before reimbursing her anything. Also request copies of receipts for the expenses. Don't just blindly accept a letter that tells you it's down to 65% of the actual expense.
 
What if she has been dumb enough to not claim the children's sports expenses?

Then we're both out the tax credit?

And does it even matter with it being phased out now?

If she gets $10,000 in disability and claims $7000 in braces what would that look like in a tax claim? Is this why she was quick to pay the whole cost on her visa when I kept saying over and over at the orthodontist I'll pay my share directly?

She insisted and I wasn't going to sit there and argue about it and transferred her my share the very next day.
 
Then it was calculated right. Only one person claims the kids on their taxes in most cases (shared is different) and the person who claims them then applies the tax deduction to the costs to split.
 
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