If you have not made a declaration or claim for child support payments before the current tax year, you should report support payments made or received on your tax return — but note that the CRA no longer includes child support payments as income or deductions.
For previous court orders, you may be required to claim or deduct support payments, depending on the date child support court orders took effect. Child support payments can affect how you report spousal support. If this feels a little overwhelming consider TurboTax Live Assist & Review and get unlimited help and advice as you do your taxes, plus a final review before you file. Or, choose TurboTax Live Full Service and have one of our tax experts do you return from start to finish.
Transition Date
“May 1997 is the dividing line,” says Wes Beharrell, certified financial planner and Division Director with Investors Group Financial Services in London, Ontario. “Prior to May 1, 1997, both child and spousal support payments were deductible to the payer and taxable to the recipient. The rules for child support changed as of that date, and are no longer deductible.” Some conditions exist that mandate agreements and orders issued prior to May 1997 to change to current rules.
Any amendment to an older agreement after the May 1997 date causes that agreement to update to current rules. If there is a subsequent agreement made after May 1997 between the same two people, previous agreements are also updated to the current rules.
If your order or agreement is dated earlier than May 1997 and both people agree, you can complete Form T1157 (Election for Child Support Payments) to change to the current rules as well. Child support is federally administered, so these guidelines apply to all provinces and territories.
Declaring Support Payments Made
Child support and spousal support are reported together on line 230. Spousal support payments remain deductible, while child support payments may or may not be, so line 220 reports what portion of the amount in line 230 is deductible.
For example, when your total annual support payments equal $4,800 divided equally between child and spousal support, you must enter $4,800 on line 230. If your child support arrangements predate May 1997, with no later agreements or orders, enter $4,800 on line 220, since all of your support payments are deductible.
Child support arrangements made in April 1997 or later alter your line 220 amount to $2,400 (accounting for deductible spousal support only).
Declaring Support Payments Received
Enter the total of all received support payments on line 156, and declare the taxable amount on line 128 of your return. This works the same way as with making support payments.
If your child support arrangements predate May 1997, lines 156 and 128 match. Later agreements for child support are not declared as taxable income and are subtracted from the amount in line 156 to give your line 128 amount.
You don’t need to declare any amounts your children receive outside of your agreement or order, such as gifts or allowance, that the support payer may give.
Child Support Priority
When your support order or agreement includes both child and spousal support, child support is considered paid first.
When support is underpaid, this may affect how you declare taxable income or support payment deductions. For example, the total support obligation for a year is $4,800 divided evenly between child and spouse, but only $2,400 of payments are made — because of the priority of child support, the CRA considers that no spousal support is paid.
The child support amount remains subject to the May 1997 provisions, but the recipient declares no taxable spousal support income and the payer may not deduct spousal support payments.
Which TurboTax Is Best for You?
All this legal stuff can seem a little confusing or hard to remember. But with the right information ahead of time, TurboTax Online will help you find all the ways you can maximize your refund (or lower your tax bill).
However, if you feel a bit overwhelmed, consider TurboTax Live Assist & Review and get unlimited help and advice from a real person as you do your taxes. Plus, there’s a final review before you file. Or, choose TurboTax Live Full Service and have one of our tax experts do you return from start to finish.
References & Resources
- Wes Beharrell CFP, Division Director, Investors Group, London, ON, (519) 679-0026 extension 674
- Canada Revenue Agency: Support Payments
- Canada Revenue Agency: Line 230 and 220 — Support Payments Made
- Canada Revenue Agency: Line 156 and 128 — Support Payments Received