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Posts from the ‘Tax Implications’ Category

Are my legal fees tax deductible?

In some cases, legal fees are deductible. For example, legal fees that are paid to pursue child or spousal support are deductible from the recipient spouse’s income.

The Income Tax Act specifically allows that for the purposes of determining taxable income, a person can deduct any legal and accounting fees (which the legislation collectively calls “professional fees”) that are incurred in the pursuit of a claim for child or spousal support. These professional fees must be deducted in the year during which they are paid. In this way, by deducting those... MORE »

How are child support payments taxed?

Parents who receive child support payments are not required to include those payments in their taxable income. Payor parents are not permitted to deduct these child support payments from their taxable income.

The result of this rule is that parents who receive child support payments are able to spend more of their support payments on their children.

There is an exception to this rule if your child support arrangements were made prior to April 30, 1997. If you have an old agreement that was made before 1997, you can elect to have... MORE »

I’m getting divorced. How does this affect my taxes?

If you and your spouse have agreed to spousal support payments or have a court order in respect to spousal support, it is important to understand a few things.

Firstly, the spouse paying support is allowed to deduct the amount they pay in spousal support from their income taxes. Secondly, the spouse receiving support is required to add this amount to their total income, as well as pay taxes on the amount received.

However, child support does not fall under these rules, and is never tax deductible.

Finally, if your divorce includes an... MORE »

What is the most important tax impact resulting from divorce?

For many couples the most important taxation issue resulting from Divorce is in regards to Spousal Support. The payor of spousal support may deduct any spousal support paid from their income taxes while the recipient must add into their income and pay taxes any spousal support received. This does not apply to child support which is not tax deductible in any circumstances.

In cases where spousal support is not an issue but there is an equalization of net family property which includes a transfer of RRSPs or a matrimonial home it... MORE »

Can my legal expenses be deducted from my income taxes?

In the majority of cases legal expenses cannot be deducted against your income taxes. There are however a couples of situations in which you can deduct your legal expenses from your income tax.

The most significant case where legal costs incurred can be tax deductible is in the cast of legal fees incurred to obtain child support or spousal support. This includes fees incurred in regards to obtaining an order for child or spousal support , fees paid in order to enforce an existing order for child or spousal support or... MORE »