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Priashna Singh explains Tax implications for divorced or separated parents

The tax season catches so many people off-guard. Most people try as much as they can to maximize savings as much as possible. Some programs have been put in place to assist families. There are many tax implications that you should learn about and many tax-saving opportunities to take advantage of if you are either divorced or separated. 

Eligible dependents

After separation, the child or children can be assigned as the eligible dependents. This can be a significant cash source. I, Priashna Singh, Barrister & Solicitor President, Singh Barristers, have seen instances where the parenting arrangement involves one parent being the primary caregiver for the child. In such a case, such a parent is eligible for child support. He or she will also be entitled to eligible dependent credit. This credit covers one child. The most important thing to note is that the deduction can be claimed in case you are the one paying child support.

There are cases where the parents are within an arrangement where there is shared parenting. This means that the parents spend almost equal time with the child or children. In case there are more children, every parent may claim one child and get deductions. 

I can guide you and shed more light on how things work. 

Agreement drafting

When an agreement is being drafted, it must be done carefully to ensure all parties’ preservation of all rights. Some agreements only offer a single set-off amount that is usually based on personal income. The amount can also be based on the federal child support guidelines. However, such an agreement cannot be sufficient. 

It is very important if you are not conversant with the shared parenting kind of arrangement to amend or create a support and parenting contract. This allows the CRA or Canada Revenue Agency to allow every parent to claim a child. 

It is very important to have an agreement about claiming a child. You should not claim without making a formal agreement beforehand. Failure to agree can cause many problems with the CRA. This is an area that my team of Brampton divorce lawyers can assist with. Get in touch with me for better handling of your situation. 

CRA then reviews the claims regarding eligible dependents. In most cases, you will need to have some supporting documents to verify such a claim. 

One of the most reliable supporting documentation is the separation agreement. However, you may need some additional evidence showing that you live in separate residences and that the child spends time with every parent. This makes things easier for the CRA. 

When separation happens, you start a new phase in your life, and it can be hard before you adjust. You need to contact me to ensure you get the support that you deserve. 

When you are separated, record-keeping is very important. You need to reconcile the various child support payments annually. This includes section 7 expenses such as audits and reviews by tax authorities. 

I believe that you need to choose a good record-keeping system as early as possible after you are separated. You should maintain that record-keeping system until your children are no longer eligible for the support and sometimes even after that. 

Universal child tax benefits, Canada child tax benefit, and GST/HST credit

Universal child tax benefits, Canada child tax benefit, and GST/HST credit are three benefits, and they all work differently when it comes to payment, policies, and qualifications. My team of Brampton divorce lawyers can help you understand all the above and guide you on eligibility. 

When you are separated, the parent who offers primary care to the child or children is eligible for the benefits. When parenting is shared equally, the benefits can be shared. When it comes to universal child care benefits, it may be agreed that every parent will be paid the monthly amount six months of the year. 

When there is a child tax benefit, and a shared parenting arrangement, every parent can apply for the benefit. If they quality according to their income for the ages and number of children, monthly benefits have to be slashed by half. The amount that is reduced serves as the CCTB amount that every parent will get every month. Each parent has the chance to make the application. 

If the parents cannot agree, and the court cannot order that just because one of the parents within a shared parenting agreement has a lower income, they should get the whole amount of the benefit instead of half. 

When you are new to the shared parenting agreement, you need RC66 obtained from the CRA. This should be filled out and applied so that you can share the benefits. Contact my team of Brampton divorce lawyers to ensure the light is shed on the different parts of the law. 

Child care expense and children fitness tax credit

Child care expenses and children fitness tax credit are other deductions and credits that I can assist with. They usually target families that have busy children. The person incurring the expenses when separated is entitled to receive the claim on their taxes. When such expenses are incurred, the person who incurred them should get all receipts and keep them to show that they were incurred. 

The fitness tax credit allows the person incurring the expense to claim it. The limit stands at 1000 dollars for every child. We can offer our expertise in this area of the law. 

As for the childcare expense deduction, things are a bit complicated. When there is a primary care parenting kind of arrangement, the parent offering primary care can claim this. The contributing parent contributes to the net cost of all the expenses. 

Where there is shared parenting, one parent may claim this expense. This is done as a net of reimbursement from the other parent. This second parent can then claim the reimbursement amount. There should be clear receipts between both parents, and it should be clear who paid which amount. 

Contact my team of separation lawyers in Brampton to get all your questions answered according to the laws that are in place. 

Priashna Singh explains Tax implications for divorced or separated parents

The tax season catches so many people off-guard. Most people try as much as they can to maximize savings as much as possible. Some programs have been put in place to assist families. There are many tax implications that you should learn about and many tax-saving opportunities to take advantage of if you are either divorced or separated. 

Eligible dependents

After separation, the child or children can be assigned as the eligible dependents. This can be a significant cash source. I, Priashna Singh, Barrister & Solicitor President, Singh Barristers, have seen instances where the parenting arrangement involves one parent being the primary caregiver for the child. In such a case, such a parent is eligible for child support. He or she will also be entitled to eligible dependent credit. This credit covers one child. The most important thing to note is that the deduction can be claimed in case you are the one paying child support.

There are cases where the parents are within an arrangement where there is shared parenting. This means that the parents spend almost equal time with the child or children. In case there are more children, every parent may claim one child and get deductions. 

I can guide you and shed more light on how things work. 

Agreement drafting

When an agreement is being drafted, it must be done carefully to ensure all parties’ preservation of all rights. Some agreements only offer a single set-off amount that is usually based on personal income. The amount can also be based on the federal child support guidelines. However, such an agreement cannot be sufficient. 

It is very important if you are not conversant with the shared parenting kind of arrangement to amend or create a support and parenting contract. This allows the CRA or Canada Revenue Agency to allow every parent to claim a child. 

It is very important to have an agreement about claiming a child. You should not claim without making a formal agreement beforehand. Failure to agree can cause many problems with the CRA. This is an area that my team of Brampton divorce lawyers can assist with. Get in touch with me for better handling of your situation. 

CRA then reviews the claims regarding eligible dependents. In most cases, you will need to have some supporting documents to verify such a claim. 

One of the most reliable supporting documentation is the separation agreement. However, you may need some additional evidence showing that you live in separate residences and that the child spends time with every parent. This makes things easier for the CRA. 

When separation happens, you start a new phase in your life, and it can be hard before you adjust. You need to contact me to ensure you get the support that you deserve. 

When you are separated, record-keeping is very important. You need to reconcile the various child support payments annually. This includes section 7 expenses such as audits and reviews by tax authorities. 

I believe that you need to choose a good record-keeping system as early as possible after you are separated. You should maintain that record-keeping system until your children are no longer eligible for the support and sometimes even after that. 

Universal child tax benefits, Canada child tax benefit, and GST/HST credit

Universal child tax benefits, Canada child tax benefit, and GST/HST credit are three benefits, and they all work differently when it comes to payment, policies, and qualifications. My team of Brampton divorce lawyers can help you understand all the above and guide you on eligibility. 

When you are separated, the parent who offers primary care to the child or children is eligible for the benefits. When parenting is shared equally, the benefits can be shared. When it comes to universal child care benefits, it may be agreed that every parent will be paid the monthly amount six months of the year. 

When there is a child tax benefit, and a shared parenting arrangement, every parent can apply for the benefit. If they quality according to their income for the ages and number of children, monthly benefits have to be slashed by half. The amount that is reduced serves as the CCTB amount that every parent will get every month. Each parent has the chance to make the application. 

If the parents cannot agree, and the court cannot order that just because one of the parents within a shared parenting agreement has a lower income, they should get the whole amount of the benefit instead of half. 

When you are new to the shared parenting agreement, you need RC66 obtained from the CRA. This should be filled out and applied so that you can share the benefits. Contact my team of Brampton divorce lawyers to ensure the light is shed on the different parts of the law. 

Child care expense and children fitness tax credit

Child care expenses and children fitness tax credit are other deductions and credits that I can assist with. They usually target families that have busy children. The person incurring the expenses when separated is entitled to receive the claim on their taxes. When such expenses are incurred, the person who incurred them should get all receipts and keep them to show that they were incurred. 

The fitness tax credit allows the person incurring the expense to claim it. The limit stands at 1000 dollars for every child. We can offer our expertise in this area of the law. 

As for the childcare expense deduction, things are a bit complicated. When there is a primary care parenting kind of arrangement, the parent offering primary care can claim this. The contributing parent contributes to the net cost of all the expenses. 

Where there is shared parenting, one parent may claim this expense. This is done as a net of reimbursement from the other parent. This second parent can then claim the reimbursement amount. There should be clear receipts between both parents, and it should be clear who paid which amount. 

Contact my team of separation lawyers in Brampton to get all your questions answered according to the laws that are in place. 

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