If you’re getting married or moving in with your partner, it may have tax implications. Here is a quick introduction on how these decisions might affect your tax return.
Common law vs. married
Do you have to be legally married for the government to consider you a couple when filing your tax return? The answer is no, your marital status can change without saying the vows.
You are considered “partners” in the eyes of the government if you have a legal spouse or are living common law. For tax purposes, you are considered common law if you live with another person in a conjugal relationship and one of the following situations applies:
- You have been continuously living together for at least 12 months.
- Your partner is the parent of your child by birth or adoption.
- Your partner has custody or control of your child and your child is wholly dependent on them for support.
You should consider notifying the Canada Revenue Agency if you have a change in marital status (by phone, in “my account” online or by completing Form RC65) because it could impact payments being received based on family income (GST, Canada Child Benefit, Guaranteed Income Supplement).
Impact on your tax return Tax credit
If you support your partner and their net income is less than $13,229, you may be eligible to claim the partner tax credit. The tax credit you can receive is calculated based on the basic amount of $13,229 less your partner’s net income.
You can claim child-care expenses if you pay for daycare, day camps, or overnight sports schools to look after your child so that your partner or you can earn income, carry on a business, attend school, or carry on research. The partner with the lower net income must claim child-care expenses unless the lower net income partner attended school during the year, was not capable of caring for children due to impairment in physical or mental function, was confined to a prison, or there was a breakdown in your relationship that led to separation of at least 90 days.
Pool Your charitable donations
If you want to get the most out of your charitable donations, pooling charitable donations together could result in a larger tax credit. This can be done by allocating the donations to the partner with the higher income to maximize the tax credits you receive and in return reduce your combined taxes.
Tuition, education and textbook amounts
If your partner or you attended a post-secondary institution and did not claim the full amount on your tax returns, then you are able to transfer up to $5,000 of this amount between you and your partner’s tax return. Any amounts carried forward from the previous year cannot be transferred over but must be used by the person who incurred them.
Filing as a couple allows you to take advantage of some of the credits and deductions listed above. However, there are many other areas that need to be considered when filing together. Be sure to contact your adviser to determine what applies to your personal circumstances before you file your next tax return.
Colin Miller is a chartered accountant and partner with KPMG’s tax practice in Lethbridge. Contact: firstname.lastname@example.org. He would like to thank Richard Reimer and Chanelle Heatherington of KPMG for their assistance with writing this article.