Child Care receipts: seems like something isn't adding up

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RLS said:
We have considered this. We decided that it would be best to contact the childcare Supervisor tomorrow before we discuss anything further with X.

Just returned from dropping off D6. As I mentioned earlier, X offered to bring along a copy of the original childcare invoice. Of course, as we expected, it was only a copy of what X's BF had recreated (we suspect recreated) and already emailed to us. My Husband didn't say anything but, "ok."

We're having a very difficult time believing that this invoice is the original. Again, the headings include "Sold To, Shipped To, Order #, Tracking #, etc." which lead us to believe that it's an invoice used at the BF's work. They're a licensed daycare, why would they would be using this template?
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It sounds very fishy to me, but it could be legit. You guys are on the right path confirming with the daycare.

My sister's ex manipulated one one of his paychecks to make it look like he made less money than he did.

Does your husband and his ex exchange income tax returns each year?

Use the below link, it will calculate how much cs a person should pay, but it also works out the percentage each person should be contributing for sec 7 expenses. You still have to calculate what the net expense would end up being. For every $1000 in childcare you pay, you can get $150 back.

Universal Child Care Benefit (UCCB)

Keep us posted.
 
Unevenplayingground said:
Does your husband and his ex exchange income tax returns each year?

Use the below link, it will calculate how much cs a person should pay, but it also works out the percentage each person should be contributing for sec 7 expenses. You still have to calculate what the net expense would end up being. For every $1000 in childcare you pay, you can get $150 back.

Universal Child Care Benefit (UCCB)

Keep us posted.
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Yes, they do exchange both tax returns and NOA's each year. Our problem is, is there a way to calculate each month exactly what the childcare NET cost would be? It would be easier to pay our portion of the monthly cost after the deduction is calculated, then to expect X to remit balance at end of year.
 
RLS said:
My apologies, I see.
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No problem.

I do believe that you can make the claim on your husband's income tax for the portion he pays. I would call the CRA to confirm, and I would call at least twice, you tend to get different responses. I would also ask them where you can get this information online, cover your butt.

Personally, I would rather make the claim on my own income tax return.

Good luck!

Oh, I forgot to mention, you can only claim up to $7000 for any child under 7, and $4000 for any child over 7. And those amounts have not changed in years, even though the expense of childcare has!

And if your husband is contributing to sports or arts programs for the child, there may be other tax rebates she should be sharing with him.

I would get really comfortable with the below site:

The Federal Child Support Guidelines: Step-by-Step
 
Just to add...only the CP can claim day care costs, which is why you only pay after deducting the UCCB...

If you want to figure out the monthly costs, you have to figure out what she receives per month for the UCCB and subtract that from the day care costs monthly...the left over is then split either 50% or proportionate to income.
 
Unevenplayingground said:
No problem.

I do believe that you can make the claim on your husband's income tax for the portion he pays. I would call the CRA to confirm, and I would call at least twice, you tend to get different responses. I would also ask them where you can get this information online, cover your butt.
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Thank you! We will have to call CRA and inquire. Will let you know what their response is. Thanks again.
 
Berner_Faith said:
Just to add...only the CP can claim day care costs, which is why you only pay after deducting the UCCB...

If you want to figure out the monthly costs, you have to figure out what she receives per month for the UCCB and subtract that from the day care costs monthly...the left over is then split either 50% or proportionate to income.
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Now something about that makes me think things have changed, that was why I recommended the OP calling the CRA (at least twice). I personally never made my ex pay for daycare.
 
RLS said:
Thank you! We will have to call CRA and inquire. Will let you know what their response is. Thanks again.
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Awesome! It can't hurt, I find the representatives at the CRA are usually good to deal with, but have them direct you to the source of the information they are providing you.

Very interested in the response.

Thanks!
 
There are a few misunderstandings here.

UCCB is "income." There is no law that says it has to be spent on child care, it is paid equally to stay-at-home parents who do not utilize daycare. Family law does not require that the expense be split after UCCB is included. That being said, it is a fair arrangement and if you can come to that arrangement with the CP, that is great. But you cannot force this arrangement, and it will not be included in a court decision on section 7 expense determination.

The amount of child care paid can be deducted up to $7000 per child up to the age of 7, and up to $4000 per child between ages of 7-16.

The amount is deducted from line 150, and yields your taxable income. So the refund you get is completely dependant on your marginal tax rate.

To explain, you pay different levels of tax at different income levels. the first level is up to 39,723. Above that up to 43,561. Above that up to 69,963...

Unless you are right on the edge of a tax rate, any deduction will reduce your income at your highest marginal tax rate. This can be confusing, so look carefully at the links below.

To give one example, let's say that you earn $80,000. You have no deductions besides the basic personal tax credit. Your marginal tax rate would be 35.39% on the amount of your income between about $77,000 and $80,000. If you had $3,000 in child care receipts, this would lower your taxable income to $77,000. The $3,000 in receipts would yield you a tax return of $1,061.70.

If you had an additional $4,000 in child care receipts, this would lower your income, but at the next lowest tax bracket, so the tax rate would be 32.98%. This $4,000 would yield a tax return of $1319.20.

So your $7,000 in receipts will bring a tax refund of $2,380.90. The amount that was actually paid for child care is net $4,619.10. This is the amount that would be split proportionate to income.

Let's say that $8,300 was the gross amount spent on child care. Only $7,000 can be claimed for a child under 7. Therefore the tax refund would be the same as above. The net amount that would be split proportionate to income would be $5,919.10.

Hopefully this is clear, the subject can be complicated.



Here is a calculator to show the marginal tax rate for your income (Ontario)
 
And also to add, it can be simpler just to use the average tax rate, especially if you have multiple deductions. It would be a difficult argument to say that the child care was the "first" amount deducted, and so should be at the highest tax rate. However if you have a simple return, and are only deduction child care expenses, the the marginal tax rate would be appropriate.
 
Are the invoices in question just scanned copies sent in PDF from the new b/f's work? I mean, I scan and email stuff all the time from work.

Or are the Word format documents that could be manipulated? If I received it in Word, I'd go back to the daycare provider just to confirm its authenticity.

If it was PDF, I'd be more likely to take it at face value as being a scan. Not many people have Adobe professional to manipulate a PDF.
 
True HammerDad, but it is also possible to create a document in Word and save it as a PDF, instead of a word document, which still does not help them identify if they are real or not.

It is possible if this is a small daycare that they simply use templates that word provides as a means of processing invoices/receipts.
 
Also, UCCB is only paid until the child is six.

My kids are older. I require before and after school care but do not receive the UCCB.
 
As others already suggested, check straight with the daycare provider facility, as they should be able to provide you direct info.

With my S6, when we were using daycare, the daycare split the payment between both myself, and his Mom. So I was always able to provide my half of fees directly to the daycare, directly, and they also issued my own tax receipt, in my name, for my share, at end of year.

They were a good daycare. :-)
 
We contacted the childcare supervisor. She had already been made aware that my Husband would be contacting her to inquire about the monthly invoices. And from her unimpressed and condescending tone, we're guessing she had already contacted X. The Supervisor told my Husband that because D6 is registered under X's name, X will be the only one to receive the invoice. Ok. However, we did learn how the monthly cost is determined. Charges still apply for days even when care is not required. So, the monthly charges can easily be determined and therefore, I don't think we need to be concerned anymore about whether or not the invoice we receive is a copy of the original from the daycare. As long as the amount on X's invoice matches the number of weekdays there are in that month. This can now be put to rest. :)

Regarding the childcare tax deduction: I called CRA and spoke to 4 different reps. lol geez! Firstly, we established that no, my Husband cannot claim his portion of the childcare expenses, but we already suspected this.

Secondly, when I addressed the childcare tax deduction, nobody seemed to know anything about my Husband having to pay his portion of total costs after the deduction. The four of them seemed to agree that this was not by law, but instead between you and your X only. Is there an official Govt. site that states my Husband should be paying his portion of the NET cost?

Thirdly, we asked rep 3 if X is supposed to claim only her portion of costs or the entire amount, she said that X can only claim her portion, she can only claim the amount that she has paid. But when we asked rep 4 the same question, she said that X can claim entire amount. Errrg! :confused:
 
The ex claims the entire cost of child care.

The simplest way to work it is to take the ex's last tax return and do 2 returns. 1 includes the child care deduction, the other does not. Using the two tax refund numbers you will be able to determine how much of the refund was allocated to child care.

You then do the simple math of dividing the amount of the child care rebate by whatever the proportional rates are for each parent and go from there.

Simple example.

Parent A - income = $30,000 - entitled to claim child care
Parent B - income = $70,000

child care is obviously paid 70/30

Annual cost of child care is $6,000

The tax refund the ex got including child care is $9,000
The tax refund the ex go excluding child care is $7,000

Meaning child care entitled the ex to a $2,000 refund, which would then be split 70/30, so your husband would be entitled to $1,400 of the that $2k.....now, good luck getting that $2k back if your ex is even remotely difficult. If the ex is difficult you deduct the $2k from THIS years annual cost of childcare, so child care cost becomes $4000, and then pay your 70% of that, so $2800 annually or $233.33 monthly.

This is a great example of why tax returns and NoA's need to be exchanged each year.
 
My Husband and X do exchange tax returns and NOA's.
We don't expect to be paid arrears, not worth the hassle. Just asking that things are carried out the correct way starting with 2012.

We've already emailed X explaining what we've learned. He put it as gently as possible, asking what her thoughts were, had she heard anything of the sort... So far X has responded with, "you are not entitled to any returns/tax credits I get!" :D
 
X is insisting that this would only apply if they had shared custody...we are to pay the total amount before the tax credit is calculated.
 
If this were me...

"Dear ex,
I will, by law and by ethics, pay my share of the NET amount of child care costs AFTER tax. The gross amount is $xxxx.xx per year, the after tax amount according to my calculations is $xxxx.xx, and my share is $xxxx.xx. I am therefor remitting to you the amount of $xxx.xx per month.

If you have issues with this, we can discuss it in front of a judge. You will lose and pay my legal fees.

Yours,
Ex-husband."

If you didn't see, I made a more detailed post about after tax calculations here.
 
Mess said:
If this were me...

"Dear ex,
I will, by law and by ethics, pay my share of the NET amount of child care costs AFTER tax. The gross amount is $xxxx.xx per year, the after tax amount according to my calculations is $xxxx.xx, and my share is $xxxx.xx. I am therefor remitting to you the amount of $xxx.xx per month.

If you have issues with this, we can discuss it in front of a judge. You will lose and pay my legal fees.

Yours,
Ex-husband."

If you didn't see, I made a more detailed post about after tax calculations here.
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We might just have to email that word for word, Mess. Thank you. Can I just ask that this does apply even though we have access not joint custody?
 
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