If you’re tying the knot this upcoming year or have just tied the knot, congratulations! Best wishes to you both on the next chapter of your lives. I’m sure you didn’t come to a Tax Blog for marriage advice, but you’re getting it anyways, so make sure you pay attention. Not only do our Tax Experts have an average of 17-years tax preparation experience but they also have an average of 17-years of blissful marriage too (I made up that last stat… Could be 18-years too).
Nonetheless, over the next few months you’ll learn so much about each other, such as finding out that maybe your wife loves tomato soup, but hates tomatoes, or eats peanut butter but won’t eat peanuts, or maybe something as shocking as one of you has a tax debt with the CRA. Remember, that your journey together will be full of new discoveries – both good and not so good – and as long as you do it together, you stand a much better chance of prolonging the love.
What each party might not know is how your tax situation changes when you say I do.
That’s where we come in! Let’s review some of the most frequently asked questions about newlywed taxes in Canada.
1. Does the Actual Wedding Date Impact My/Our Taxes?
No. The actual date that you get married does not, however we would suggest that April 30th (Tax deadline day) might not be the most romantic date to get hitched, but even if that is your wedding date, being prepared in advance can save that day from last-minute tax filing and keep it clear for romance and bonding.
If you get married at any time during the year, you’re considered to be married all year for income tax purposes. Therefore, the tax treatment is exactly the same regardless of if you’re married on January 1st 2018 or December 31st 2018. You will, however, have to inform the Canada Revenue Agency (CRA) of your new marital status by the end of the month after the month you were married. You can do that a variety of ways, such as;
- use the “Change my marital status” service in My Account.
- select “Marital status” in the MyBenefits CRA or MyCRA mobile apps.
- call 1-800-387-1193.
- send the CRA a completed Form RC65, Marital Status Change.
2. Do We Just File “Joint” Returns Now?
Again, no. There is actually no such thing as a joint return in Canada. Each spouse still files his/her own tax return but now certain amounts from the other spouse’s return come into play such as their name, SIN, income and employment.
As Canadians we do that what is referred to as a “coupled” return, but that only refers to the process of preparing the returns. Coupled returns are prepared at the same time using tax preparation software and the software detects amounts from each return simultaneously to calculate certain credits for each of you. This is especially handy for tuition or disability amount transfers.
3. To Avoid Confusion, Can I Still File as Single?
After you tie the knot, you must file as a married couple once you are married. You will never, ever, file a tax return as single again, no matter the changes to marriage in the future. In fact, if you do get married, or are deemed to be Common Law, and do not inform the CRA, the consequences can be significant.
The rationale behind the severity of the omission is that once married, both your income and your spouse’s 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. The good news is that you can now transfer some credits to your spouse (if you don’t use them first) and pool others such as medical expenses and donations.
4. Can Unused Tuition Credits Be Transferred to My New Spouse?
If your spouse or common-law partner does not need to claim all of certain non-refundable tax credits to reduce their federal tax to “0”, then you may be able to transfer those unused amounts to your return, if applicable:
- The age amount if your spouse or common-law partner was 65 years of age or older
- The pension income amount
- The disability amount for self
- The tuition amount for 2018 that your spouse or common-law partner designates to you, to a maximum of $5,000, minus the amounts that they use even if there is still an unused part.
- The Canada caregiver amount for infirm children under 18 years of age
Your spouse or common-law partner cannot transfer to you any tuition, education or textbook amounts carried forward from a previous year.
If you were separated because of a breakdown in your relationship for a period of 90 days or more including December 31, 2018, your spouse or common-law partner cannot transfer any unused amounts to you.
5. Can I Claim Credits For My Step-Children?
Absolutely. Most credits related to children can be claimed by either the parent or step-parent, and in some cases, such as child care expenses, the step parent may have to claim the deduction if he or she is the lower income earner in the family unit.
6. Can Wedding Expenses Be Claimed On My Tax Return?
Likely the most commonly asked wedding-related question of all time! Unfortunately, the answer is no. Even if you own your own business, or invite your boss, or use the event to promote yourself. So make sure to budget wisely!
TurboTax takes the guesswork out of filing your taxes as a married couple for the first time. All TurboTax products automatically search through the over 400 tax credits and deductions to ensure that you are claiming everything that you are eligible to. As you start your lives together, maximize your credits and deductions as individuals and as a married couple, so you pay the least amount of taxes allowable is the best gift we can give you.
(PS, please don’t seat us in the back corner, behind the giant column, near the kitchen at the table with that cousin that no body likes. Thanks.)