Getting married or starting a common-law relationship makes for some big adjustments in your lifestyle. Filing taxes together for the first time means some changes, too, and this complete tax guide for newly married couples will answer all of your questions!
Your tax situation changes with your marital status. If there are no dependents, and you both make about the same amount of income, the changes are minimal. If one of you has a lower income or several tax credits to claim, the changes are bound to be pleasant.
The Spousal Amount
The spousal amount, a non-refundable tax credit, is for if you support your spouse during the year and their net income is less than $12,069 (2019). You receive the difference between their income and $12,069.
Transferable credits – a tax guide for newly married couples
Now that you are married, or common-law, you can transfer credits if you or your spouse don’t use the total amounts of any of these tax credits:
You transfer unused portions of these amounts to your return at line 32600.
For example, if you attend university and have a comparatively low income, you may find that all of your tuition credits aren’t necessary for you this year. Any leftover credits can carry forward, or you can transfer them to your spouse. Your spouse could get up to $5,000 in tax credits to lower their tax bill.
If either of you purchased a house this tax year, check to see if you qualify for the homebuyer’s credit of $5,000. Both of you must not have lived in a home you own for four years before buying the new house.
Either you or your partner can claim:
- Adoption expense
- Political Contributions
- Provincial amount for children and/or young children
- Provincial tax reduction
How to combine credits
Now that you share expenses, you can combine some of those expenses, so one of you claims the total. You can combine credits like:
- Medical expenses for you, your spouse, and any children (born 1998 or later) See line 33099
- Medical expenses for dependents you support like parents or grandparents. See line 33199
- Charitable donations. See line 34900. If you both have charitable donations, you can choose to have one of you claim the combined total. Donations over $200 give bigger deductions, so combining the credits is often a significant saving.
If the spouse with an eligible pension is the higher earner, pension splitting often leads to tax savings for the couple. Even though no money changes hands, the higher-earning spouse designates part of the pension income to the lower-earning spouse.
Contributing to both Registered Retirement Savings Plans
Contributions to your spouse’s RRSP are deductible from your taxable income. If you have a higher income, taxed at a higher rate, this can reduce your current year’s taxes. But any contributions made to their RRSP reduce your deduction limit.
The total deduction for contributions to both RRSPs can’t be more than your deduction limit. If you can’t contribute any more to your RRSP because of your age, you can add to your spouse’s RRSP until they turn 71.
Do newly married couples file “joint” or “coupled” tax returns?
No. It is a common misconception that being together means filing a “joint” tax return. In Canada, everyone files an individual return, regardless of marital status. Everyone submits their own tax return to the CRA.
“Coupled” returns mean each spouse files an individual return, but they are prepared together. If you have any tax credits to combine or income to split, a coupled return is the best way to go.