If you got married or began a common-law relationship last year, congrats! Chances are you’ve already made some big adjustments to your life. 

Filing taxes as a couple is probably also a new experience for you, and you’ll likely notice some changes. It’s important to have all the right information before you embark on filing your taxes. We’re here to make the process as easy as falling in love.

Key Takeaways
  1. You are considered married if you and your partner were legally married during the tax year. 
  2. To fall under the common-law category, you and your partner must have lived together for a minimum of 12 consecutive months.
  3. In Canada, regardless of your marital status, tax returns are filed individually. After a couple is married, they are still required to file two individual returns, but both returns should be prepared together. 

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1. What are the differences between being marriage and common-law?

Marriage Common-law

The Canada Revenue Agency (CRA) considers you to be a married person if you were legally married before or during the year for which you are filing your tax return.

When completing your return, you must report a variety of information:

  • Your spouse’s name
  • Net Income
  • Employment status
  • Whether or not you receive certain benefits, such as the Canada Child Benefit.

To be considered common-law partners, you must have lived together as a couple for the last 12 months.

If you have not lived together for up to 12 months, the CRA considers you common-law partners if you share a child by birth, adoption, or if one of you supports the other’s child.

TIP: Under Canadian law, same sex couples and couples of the opposite sex are both treated the same for income tax purposes, whether they are married or common-law.

2. How does being married or in a common-law relationship affect your taxes?

Once your marital or common-law relationship status changes, so does your tax situation.

Your tax return now reflects multiple factors, such as income levels of each spouse and available credits and deductions. 

When you get married, both your incomes are combined to determine eligibility for certain benefits, such as the GST/HST credit. If you’ve each received the GST/HST benefit in the past, for example, your combined income may now push you past the income cap. 

3. Should you and your spouse file taxes together or separately?

Unlike other countries such as the United States, Canadian tax rules don’t allow spouses or common-laws to file joint income tax returns. Each Canadian files their own tax return and indicates their marital status and name of their significant other on the return.

A coupled return means that each spouse files an individual return, but the returns are prepared together. If you can split or combine any of the above credits, a coupled return is your best bet.

What happens when one spouse earns more income than the other?

Couples where one individual earns significantly more money than the other, often pay more income tax than they would if their incomes were equal. 

So it’s important for the spouse with the higher income to maximize deductions to reduce paying taxes at a higher rate.

The CRA doesn’t always allow deductions to be passed on to the spouse. For example, if you or your spouse spends money on child care, it may be possible to deduct some of those expenses from your income when filing your federal income tax return. But with certain exceptions, the person with the lower income must claim the child care expenses. 

With TurboTax Live Full Service we have live tax experts in your corner making sure that you get all the credits and deductions you deserve. 

4. How do you update your relationship status with the CRA?

It’s best you update your records of any change in your marital status as soon as possible, but, by law, it must be done by the end of the month following your marriage. For example, if you were married on June 8, you must inform the CRA by July 31.

You can update this in a variety of ways, such as:

5. Are there any tax benefits to being married

The good news is that you can now transfer some credits to your spouse (if you don’t use them first) and pool others. Specifically you can:

  • Transfer unused credits. If you file as married or common law and have some unused credits, these can be transferred to your spouse or partner. These include tuition amount, age amount, disability amount, and pension income amount.
  • Combine credits and expenses. As a couple, you can pool certain expenses and have one spouse claim the total. Pooled credits include medical expenses for yourself, your spouse, children under the age of 18, and other dependents such as your parents or grandparents.  
  • Combine charitable donation credits. By having one partner claim the combined amount of both of your donations, you can achieve significant savings, especially if donations total over $200.
  • Split a pension. If one spouse has eligible pension income and is the higher earner, splitting the pension income may lead to a lower bottom line for you as a couple. Complete T1032 form and you can benefit from this by paying less tax overall.
  • Start a Spousal RRSP. The biggest tax benefits reside with retirement savings plans. A Spousal Registered Retirement Savings Plan works in much the same way as a personal RRSP in that it’s a way to reduce income tax after retirement. The only difference is that you can contribute to it, but it remains in your spouse’s name and under their control.

While filling out your partner’s information on your tax return is fairly straightforward, deciding which credits or expenses to claim on each return can be confusing.

To help, TurboTax offers coupled returns which are prepared simultaneously. Our tax software prompts you to enter information about you and your spouse while crunching the numbers in real time to decide who benefits from what credits. All while minimizing overall taxes owed and maximizing refunds wherever possible. 

TIP: If you receive benefits you aren’t entitled to because of an incorrect marital status, you’ll be asked to repay them, with penalties and interest. 

Big life changes? No problem

Got married or divorced? Had a baby? New job situation? TurboTax can help you find new credits and deductions.

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