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But your ex-wife isn't getting preferential tax treatment
Q: I’m separating and my ex-wife and I agreed on an amount for child support. I’ve since learned that I will be paying her approximately $800/month. I’ve also learned that this amount is NOT tax deductible for me and she does NOT have to claim it as income. But she makes $12,000/year more than me. The way I see it, after deductions we both retain less but approximately $10,000 of my take home will be given to her as a loss for me but a gain for her tax-free. Please explain how it is that I cannot claim this as a deduction? It doesn’t seem fair? Are my two kids not considered my dependents for tax purposes? Will she be able to claim the kids as dependents and receive the child tax credit as well? I’d love an explanation of how this is fair from the CRA’s point of view.
–Ronald
A: Your explanation of the situation is correct. Amounts paid for child support are not deductible to the payor or taxable to the recipient. The logic behind the decision to make child support non-deductible and non-taxable was that there should be no direct tax advantages for supporting one’s own children whether living together or apart.
Having said that, between 2006 and 2014 there was a non-refundable tax credit allowed for dependent children, but that claim no longer exists. If your ex-wife remains single, she may be able to claim one of the children as an eligible dependant, which is like an “equivalent to spouse” claim for that child. No other claims are allowed simply on account of her having the children.
Your ex-wife will be eligible for the Canada Child Benefit, like any other parent who cares for children and that will be reduced by her net income over $30,000. The only change here is that your net income is no longer used to determine how much Canada Child Benefit is received.
Ask a Tax Expert: Leave your question for Evelyn »
Evelyn Jacks is president of Knowledge Bureau, which offers e-learning at knowledgebureau.com. Evelyn tweets @evelynjacks and blogs at evelynjacks.com
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hi, just reading your response, because you say that there should be no tax advantage for support a child, but the reciever gets a tax advantage for supporting a child? doesnt seem fair or make much sense.
also , is this why if you pay child support they can deny you many benefits. me and my ex decided to alternate years claiming our children, but in the court agreement, it says that i pay 100 dollars a month child support. so according to revenue canada, if i pay any amount of child support, i cannot get any benefits. BUT if i were to rephrase that agreement to 100 dollars a month gas money. then i would be allowed to claim my child on my year because its not child support.
what is the reason that 50 50 everything is not the norm if both parents are present at birth, why does there have to be a primary care giver. and why cant both parents be primary
Very unfair. My son struggles to pay his bills after paying child support every month. He does all the driving back an forth adding wear and tear to his vehicle and paying for gas (1 hr back and forth). His son is with his dad every weekend and he wants to see him as much as possible. He spends money every weekend for food and also buys him clothes and other items plus splits Dr bills and paying for him to participate in sports. So tell me how these tax rules are fair?? You wonder why fathers go MIA? They can’t even support themselves after paying support. Mom buys a condo and my son lives in a dinky apartment.
They were never married but he is doing the right thing and loves his son very much which makes me very proud. This tax law needs to be. CHANGED!
There definetly should be. My ex dissapeared when she got pregnant. Lost custody do her mom. This caused me to pay for a lawyer, to fight just to get a test I paid for to prove that my daughter is mine. Unless she screwed up royally, from then its harmful to rehome her. After years of paying for a therapist if her choosing to discuss things and having to deal with rules and the like that noe reasonable person would be ok with, but I did for my daughter. Then had to pay for more therapy to talk this through at her request after my family had a suprise party for my birthday and invited both my daughter and girlfriend ( whom I am not engaged to). Then told me in from of the therapist that if i wanted any agreement on paper I would have take her above the therapist (who was completing her mediation certification) and then claimed in court that she didnt know why we could possibly be there. That the therapist said we would work on things when in actuality she literally said that it wasnt my daughters problem, it wasnt my problem, it was a problem for her to deal with. Literally 10’s of thousands of dollars to do the right thing. As an aside, the first lawyer i talked to at 16 told me under no circumstances could he advise a client to pursue this due to financial ramifications – but again, right thing to do for my daughter. Then its a case of my child support (granted i wasnt paying, but i was also mislead into believing she was doing far better and was more stable than me when she actually ended up using my daughter as an excuse to accept her physical limitations and do literally nothing with her life. Yes thats cold if she has problems, but I also have plenty of my own diagnosed physical issues that I work through as normally as possoble so im not judging her for that in and of itself) being enough that my now fiancee and her(obviously now our) son had to move an hour away to live with my mom. Fuel prices are up and theres nothing i can do to lower my costs (she lives with her own parents by choice so she isnt hurting) except keep living at my moms, spending as much as i was on my previous home on gas to get to work(now long term disgnosis so for benefit reasons I cant work closwr to home right now) while i fall further into debt because i am responsible enough to prioritize my child support. Years on and its an ever deepening hole. Only 3 years left of paying, but it will never, ever be recovered from . While alot of those things arents my daughters guardians fault and shouldnt hurt her further(she has taken care of my daughter ,disagreements and all so i am thankful), the government should really cut me a break here as I have done as much of the right thing as possible from the moment I could. For anyone thinks that 15 is too young -it is. But from the moment I heard the news I was commited. And for a male its far easier. I could have worked as a full time labourer immediately and had support at home from my family. Excuse my writing, its the internet.
These rules are defiantly unfair!!! Paying support for my children, still should be tax deductible for the payee because the children are dependant on it!! Isn’t that the reasoning behind Child support being payed?? Not to mention, the math used to calculate is also not right, as it causes financial hardship on the payee, which in my case is approx 1/3 of my net income! Child support paid should be able to be claimed for dependants!!
I have been severely abused by this system for 30 years now. when asked, a Judge replied that the system in not meant to be fair. I paid over half of my after tax income. (earned 35k, paid 15k + extras) I drove from 8 hrs to 16 hrs after a move each 2nd weekend at my costs. I couldnt put gas in my car without a credit card, and the mother took regular vacations. The kids did not get anything.
The financial summary, my 35k after tax was about 26.5K. I paid out 15K leaving me with 11.5K for my life. I lived in a 1 room apt for 500 a month, .. yet the judge said I made enough to afford this payment. In all fairness, no spouse should gain from the success of a parner years after a seperation. Not unless they are also willing to share in a partners possible future losses as well. No one should gain a tax advantage as is the case here. The mother should be paying tax on the free money obtained and the father should have a tax deduction. A shared tax return would achieve this, so a paying parent should not be assumed to pay support out of after tax funds. A PARENT should not rely on anyone to pay for thier child as they should be independant enough to do so in the best manner they can.
In summary, this is a very biased system as stated by a judge, and the man will always pay becuase they are the ones working who are willing to spend the money to be with the child. Even a rich mother will get support from a poor father as the man will continue to work to survive.