If you have children when your relationship breaks down, then you have to make certain decisions.
Where are the children going to live? How are the separated parents going to make decisions together about their children?
What is custody?
The word “custody” refers to how you are going to make major decisions about your child after you separate. It's not the same thing as where the children are going to live.
Examples of major decisions might include religious instruction, choice of schools, or medical care.
Sole custody means one person has the right to make these decisions.
Joint custody means that both parents will make the major decisions together.
Parenting arrangements can affect your eligibility for tax credits and child care deductions
ELIGIBLE DEPENDENT CREDIT
If you pay child support, you cannot claim a deduction under your personal tax credits for that child.
The eligible dependent credit is available to the parent with whom a child lived (under 18 years).
In situations where parenting time is high enough to be called “shared custody”, the parents need to agree who will claim the eligible dependent credit. This is because only one parent can claim it. If the parents cannot agree who will claim the eligible dependent credit, it is lost.
CHILD CARE DEDUCTIONS
A deduction for child care expenses is available for children under the age of 16 years.
The deduction is available for nursery school, day-care, day camp, boarding school, or overnight camp.
The child care deduction is available to the parent with whom the child lived for eligible expenses paid by the individual.
In situations where parenting time is high enough to be called “shared custody”, both parents can claim a deduction for the year in which they paid expenses and shared custody.
CANADA CHILD TAX BENEFIT
A non-taxable benefit is paid to eligible families with children under 18 years of age.
The benefit is available to Canadian resident who are the parent with primary responsibility for the child.
In situations where parenting time is high enough to be called “shared custody”, both parents can claim the benefit. Each parent will be paid 50% of the benefit allowed had the child lived with that parent. However, the benefit is reduced for incomes above a certain threshold.
(as of July 2011, both shared custody parents can have the payment split to them in the same month).
UNIVERSAL CHILD CARE BENEFIT
This is a taxable monthly benefit paid to the parents of each child under the age of 6 years.
For married parents, it must be included in the lower income.
Single parents can include the benefit in the income of the child for whom it is claimed.
Separated parents can split the benefit.
You can claim medical expenses for a dependent.
The child does not have to be living with you and you don't have to have custody.
TUITION AND EDUCATION CREDIT
The child must first use the credit to reduce their taxable income to zero.
Unused portions can then be transferred to a parent to a maximum of $5,000.
Credit cannot be split between two parents.
Child can choose whether or not to transfer credits.
Continue to Part 2.2 - Support
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