If you’re separating from your spouse or common-law partner or going through a divorce and have children, your tax return might not be at the top of your priorities. However, it’s important to negotiate how the children will be claimed as part of your separation or divorce agreement. For example, some tax credits can be claimed by either parent while others can only be claimed by the primary caregiver. The following factors should be considered when claiming tax credits and benefits related to the custody of your child.
You can claim legal fees or expenses you paid for court appearances to obtain the following:
- A court order in 2016 stating that you have primary custody of your child(ren)
- Child support payments or an increase in child support payments, regardless of the outcome
- Collection of late child support payments
Note: You can claim your legal fees as carrying charges on the Schedule 4 page under the PENSION PLANS AND INVESTMENTS icon on the PREPARE tab.
Eligible dependant amount
If you have primary custody of your child, you can claim the amount for an eligible dependant. If, however, you have joint custody and both you and your ex-spouse are eligible to claim this amount for your child, only one of you can claim it. You must decide together which parent will claim this amount – you can also take turns to claim it. If you can’t decide who will claim the amount, the Canada Revenue Agency (CRA) will disallow it.
Now, if you have primary custody of more than one child, you can only claim the eligible dependant amount for one child. If you have joint custody of your children, each parent can claim the amount for an eligible dependant for one child.
Child care expenses
Generally, childcare expenses are claimed by the parent with the lower income and must have been paid in order to allow the parent to work or go to school. When parents are separated, however, the parent living with the child can claim this amount regardless of their income. If the child lived with both parents at different times in the year, as in the case of a joint custody, both parents can claim childcare expenses for the period when the child lived with them.
Children’s fitness and arts amounts
Both these amounts can be claimed by either parent as long as the total amount that’s being claimed is not more than the maximum allowed. For 2016, you can claim a maximum of $500 in children’s fitness amount and $250 in children’s arts amount.
Note: Both these tax credits are being eliminated starting 2017.
Child benefits such as the universal child care benefit (UCCB), Canada child tax benefit (CCTB), and the Canada child benefit (CCB) are usually paid to the parent who is primarily responsible for the care and upbringing of the child (usually the mother) and with whom the child lives. If you have joint custody of your child, the CRA will conduct a review to see which parent should receive the benefits. If both you and your spouse meet the requirements for these benefits, each of you might be able to receive half of the benefit amount.
Note: The UCCB and CCTB have been replaced by the Canada child benefit (CCB) starting July 1, 2016.
Remember, these benefits are based on your marital status and income. That’s why it’s important to let the CRA know as soon as your marital status changes so that they can calculate the benefit amounts accurately.