Married Tax Returns in Canada

What are married tax returns?

With regards to income tax, spouses and common-law partners of the same or different gender are treated the same way in Canada. A “spouse” is the person to whom you are legally married.  A “common-law partner”, is based on whether or not you have children. If no children are involved, you are generally considered common-law partners after having lived together as a couple for a period of 12 months.

What are the benefits of marriage on my taxes?

You can claim all or part of your spouse’s or partner’s age, pension income or disability amounts if they don’t need them to reduce their taxes to zero. Married or common-law couples can also combine their charitable donations and medical expenses to their advantage.

The biggest tax benefits reside with retirement savings plans. You can purchase spousal RRSPs for added deductions, benefit from income-splitting opportunities in retirement and transfer plans to the surviving spouse without tax consequences. Retired spouses or partners can split the Canada Pension Plan credits they accumulated during their working years.

What if we buy a house?

With the Home Buyers' Plan, you can both withdraw up to $25,000 from RRSPs to buy or build a home. In addition, either of you can claim or you can share the First-Time Home Buyer’s Tax Credit (HBTC) on your taxes.

Any tax breaks for students?

Under the Lifelong Learning Plan, you can withdraw amounts from your RRSPs to pay for training or education for you, your spouse or common-law partner. You can transfer to your spouse or partner your unused tuition, education, and textbook amounts, if you don’t need them to reduce your taxes to zero.

What happens to my government cheques?

The amount of your social assistance payments, Working Income Tax Benefit and the GST/HST Credit may change. As a married couple, what you get from provincial tax credit programs (Ontario, Manitoba, British Columbia and Québec) may be different as well. The income of the couple is used to calculate the benefits to which you are entitled.

What about filing a married tax return?

With tax software, filing together is a lot easier because the shared information can be transferred between spouses or partners, reducing data entry and the risk of errors. The software also maximizes your credits and achieves the best net benefit to both of you. Even if you can’t file a joint return, you have to provide your spouse’s SIN number and net income, including UCCB income and/or repayment.

One or both of us have children and I will be living with my child’s parent.

When you move in with your child’s biological or adoptive parent, you are considered common-law from that day on.

One or both of us already have children – what will change?

Tax-wise, it is not generally to your advantage to get married or start living common-law. After one year living together, your status for tax purposes and home tax deductions becomes that of common-law and, for the following year onwards, you can’t claim the amount for an eligible dependant for one of your children.

Since your income and that of your spouse or partner will be added together, the amount(s) of the benefit(s) you received for your children may be reduced. Your child care expenses can now only be claimed by the parent with the lower net income but you can claim the spouse or common-law partner amount if their income is under a certain amount.

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