What happens when you get married/become common law?

Finding a life partner is a big deal - ideally it is someone who makes your heart pound and your hands feel a little sweaty…..but in a good way!  What you don’t want is your heart to pound and your hands to sweat because you’re worried about how your beloved is going to affect your taxes.

Once you are married or common law, the two of you are from there forward cross-referenced on each other’s tax returns for the duration of your time together.  You both still each file your own tax return, but you indicate your spouse’s name, SIN and net income on your return (and they do the same for you on theirs). In the year you got married/became common law, you also both have to indicate on your tax return that your marital status changed in that year, and provide the date of the change (it’s helpful if you both show the same date!)

Here’s a quick list of impacts on your returns for any year you file as married or common law:

• If Spouse #1 has taxable income below the basic personal exemption amount (currently around $11,800), then Spouse #2 may get to claim them as an eligible dependent.  If so, Spouse #2 gets a tax credit for the difference between Spouse #1’s income, and the basic personal exemption
• A person can transfer unused tuition credits from tuition paid in that year to their spouse for them to receive a tax credit  
• The person with the lowest income normally has to claim the deduction for childcare expenses, though there are certain circumstances where the higher-income spouse can claim them (ie. if the lower-income spouse was in school, have an impairment, etc.)
• If you are claiming the Home Buyer’s tax credit, you have to determine how much/what percentage each spouse will claim
• If a child of yours is transferring unused tuition credits from that year to a parent, only one parent may claim it (you cannot split it between spouses)
• There may be other credits which can be transferred to your spouse, such as the age amount, caregiver amount and disability amount if those circumstances apply to your taxes

---

Also in Tax Tips

To Depreciate or Not, That is the Question!

To claim or not to claim depreciation on your varying classes of capital assets depends on a few factors. Either way, it is important to understand the possible implications of claiming CCA, and to choose in an informed way!

View full article →

Can I Write Off My House?

Some of the most common questions that we get from self-employed clients are around what expenses can be claimed for using your home in the business. You can definitely claim a proportionate amount of expenses related to the house, but you will want to be sure to make the calculation easy for CRA to understand.

View full article →

Work From Home Due to COVID? Be Sure to Claim the Deduction!

COVID-19 has resulted in a lot more people working from home, at least some of the time in 2020. The rules have been updated to reflect this 2020 reality, and include a new simplified calculation and the possibility of claiming it without the Declaration from your employer.

View full article →