Spousal Support and Taxes
Revenue Canada treats support payments as you might expect. If you are receiving payments Revenue Canada will expect you to report that money as income. On the other hand if you are making support payments you may deduct them from your taxes as an expense. Because the money out must equal the money in, it is important each person keep accurate and detailed documentation of support payments. Such documentation is shows its value in cases where a discrepancy comes up. Here are a few tips to ensure that your spousal support payments are calculated accurately at year end:
- Get a written agreement or court order that specifies if the support payments will be taxable or nontaxable.
- If you are making payments get an annual receipt for your payments. Alternatively if you are receiving payments issue an annual receipt for the payments you received to your spouse so they can file the receipt with their tax return. This ensures both sides are on the same page when they file their taxes.
- Sign up for BC's family maintenance enforcement program (FMEP). This is a free public enforcement agency available to both payers and recipients that maintains a record and schedule of all support payments made.