Navigating Taxes as a Newly Married or Common-Law Couple

Congratulations on your new journey together! If you’ve recently tied the knot or entered a common-law partnership, life has likely thrown some exciting changes your way. Among these is figuring out how to tackle taxes as a duo. Don’t worry; we’re here to simplify tax filing for you, making it as seamless as falling in love.

Key Points to Remember

You’re seen as married for tax purposes if you were legally wed in the tax year.
Being in a common-law relationship means living together for at least 12 months straight.
In Canada, you’ll still file taxes individually even after marriage. It’s crucial, however, to prepare both returns together to ensure accuracy.

Filing Taxes with Ease

Marriage vs. Common-Law: Understanding the Distinctions

Marriage	Common-Law
The Canada Revenue Agency (CRA) recognizes you as married if you’ve legally wed before or during the tax year. Your tax return should include your spouse’s full name, their net income, job status, and any benefits you receive, like the Canada Child Benefit.	You’re in a common-law partnership if you’ve lived together for 12 consecutive months. If you haven’t hit the 12-month mark but have a child together or one supports the other’s child, you’re also considered common-law partners. Importantly, the CRA treats same-sex and opposite-sex couples equally for tax purposes.

Tax Implications of Your Relationship Status

Changing your relationship status to married or common-law impacts your taxes. Factors like both partners’ incomes and eligible credits and deductions come into play. If you were previously receiving benefits like the GST/HST credit individually, combining your incomes might affect your eligibility.

Filing Together or Separately?

Canadian tax rules don’t allow for joint tax returns. Even as a couple, you’ll each file your own return but indicate your marital status and partner’s name. Preparing your returns together is beneficial, especially if you can share or split certain credits.

When Incomes Differ

Disparity in earnings between spouses can lead to higher taxes. It’s wise for the higher-earning partner to maximize deductions to mitigate this. Remember, the CRA might not always allow transferring deductions between spouses. For instance, childcare expenses generally need to be claimed by the partner with the lower income.

Updating Your Status with the CRA

Make sure to inform the CRA of your new relationship status promptly, ideally by the end of the month after your marriage or common-law relationship begins. You can do this through various methods, including the CRA’s online services, mobile apps, a phone call, or by mailing a completed Form RC65.

Marriage and Tax Benefits

Being married or in a common-law relationship does bring some tax perks. You can transfer unused credits to your partner and pool certain expenses and credits for claims, like medical expenses and charitable donations. Pension income splitting and starting a Spousal RRSP are other ways to enjoy tax benefits, particularly for retirement savings.

Final Tip

Incorrectly reporting your marital status can lead to having to repay benefits with added penalties and interest. Make sure your status is up-to-date to avoid any issues.

By keeping these guidelines in mind, you can navigate your taxes confidently as a couple, ensuring you make the most of your filings.