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When you are engaged and planning your big day, notifying the Canada Revenue Agency (CRA) of your marital status probably isn’t at the top of your priority list. But, you will need to think about it before tax time though. When it comes to filing Canadian income taxes as a married couple, there are a few things you need to know. Unlike U.S tax filers, Canadian couples don’t file a single tax return. In Canada, each spouse files a separate tax return and receives a separate tax bill or tax refund. That said, a married or common-law couple can use the information from their spouse’s return and a couple can pool expenses to decrease taxes or increase tax credit amounts.

Check out what the tax rates are in Canada.

What Are CRAs Guidelines for Filing Taxes When You’re Married?

If you are married you will need to note that when you file your tax return. In fact, the Canada Revenue Agency expects you to change your status on their online system within a month of your wedding date. When you make this change by mail or on the CRA website, you can expect some of your benefits to change. For example, when you’re a couple you must report any credits your spouse claims including  CCB, GST/HST or any payments your partner owes.

What About Filing Tax Returns When You’re in a Common Law Relationship?

Many people believe that you can choose whether or not to claim common-law status. This isn’t true. 

According to CRA, you are living common-law if you’ve been living together for 12 months. If you have a child together, common-law status kicks in as soon as you move in together.  You are also considered common-law if you are supporting or living with a step child.

As common-law partners, you are able to reap the benefits of being married when filing your income taxes.

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Tax Benefits for Married or Common-law Couples

Some people worry that if you file your taxes together, you’ll pay taxes on the entire income. This isn’t the case as you each file and pay taxes separately. However, there are benefits to coordinating your tax files as married and common-law couples, you may find yourselves eligible for more tax credits or deductions that can help lower your income taxes.

Spousal Tax Credit

In Canada, the Basic Personal Amount (BPA) is a federal tax credit that allows you to get back all the federal income tax you’ve paid. To receive this your income must be at or lower than the BPA, which is $15,705 for 2024. As a couple, if one partner earns less than the BPA, the other partner can use the difference to lower the amount of taxes they owe by claiming the spousal tax credit. The difference between your partner’s income and the BPA will be the amount you’re allowed to claim. 

Check out how much taxes you’ll have to pay by province.

Pooled Medical Expenses

If you are married, you can combine some of your expenses to get the most from your tax credits. In particular, you can take advantage of filing as a couple by maximizing your medical expense claims. You can get a bigger medical expense tax credit when you combine your medical expenses and have the partner with the lower income claim it on their tax return. The reason being, your tax credit is based as a certain dollar amount or percentage of your income. For the 2021 tax year, this meant that you could claim medical expenses when they reached over $2,421 or 3% of your net income (whichever is lower). While one person may not reach the required amount, a couple may be more likely to exceed it and receive a higher tax credit.

Check out if you qualify for disability tax credit.

Charitable Donation Tax Credit 

Another example of pooled expenses is donations. When you donate to registered charities in Canada, you’ll be eligible for a non-refundable tax credit. In general, you can receive a tax credit of 15% of the first $200 you give to charity. However, when you give more than $200, you can claim up to 29%. By filing as a couple, you can combine your charitable contributions and file them under one partner. Doing so will allow you to gain access to a higher tax credit more easily which can lead to more savings.  

Do you drive a hybrid or electric car? Check out all the tax credits you can claim.

Transfers 

Another perk for married couples is being able to transfer certain tax credits from one spouse to another if the entire amount is not needed on one return.  For example, tuition, disability, pension income and age amounts can be transferred from one spouse to another to help reduce the amount of taxes owed.

Dependents

If one spouse makes less than the basic tax amount ($11,635 in 2017), the higher income spouse may be able to claim the lower income spouse as a dependent.

RRSPs 

If your partner has some contribution room left in their RRSP, you could put money in their RRSP. This is particularly advantageous to those who have a high income tax bracket. By contributing to your partner’s RRSP you’ll reduce the amount of taxes you’ll have to pay and it also help balance incomes after retirement. This is also a great option for those who cannot contribute to their RRSP because they’re over 71. If your partner is under the age of 71, you can continue to contribute to the RRSP until they too become 71. 

Investment Dividends 

You may also be able to split investment dividends between spouses to save on income tax. If you are already retired, you can split your pension by giving a portion of your income to your partner. By splitting your pension with your partner, you’ll be able to save on taxes by landing in a lower income tax bracket.

How Do You File Taxes When You are Married or in a Common-law Relationship?

While you can’t file a joint tax return in Canada, it is easy to file coordinated returns as a married couple. Tax software allows you to enter all of your information and your spouse’s information. Both returns will be saved and filed separately but the software will help you to assign credits, benefits and expenses in a way that maximizes your tax credits and deductions. You’ll need to provide your spouse’s name, social insurance number, net income and information about benefits they have received.

If you are unsure whether the software is doing its job or just want the security of knowing it is done right, a tax professional can answer all of your questions and put your mind at ease.

Income Tax FAQs

When filling your tax return, when is your partner considered as a common law partner?

If you have a child with someone or live with someone you have a conjugal relationship with for 12 months or more, you’re considered as common law partners and must indicate it as such when you file your tax return. 

What if you are no longer married?

Just as you need to make CRA aware when you get married or start living together, you’ll also need to contact them to notify them of a change in marital status, within a month, if your marriage ends. In case of separation only, you’ll need to let them know if you are separated more than 90 days.

What happens if you file your taxes as a single when you are married?

Forgetting to change your marital status before tax time could be a costly mistake. As a single person, you may qualify for tax benefits such as GST/HST or the Canada Child Tax Benefit that you may not be eligible for with a combined marriage income. If you receive these benefits when you are not entitled to, you will likely be asked to repay them. It’s in your best interest to make sure your marital status is up-to-date with the CRA.

Bottom Line

It is mandatory that you change your marital status when you’re married or in a common law relationship. Filing as a couple has numerous impacts on your credit and deductions. Be sure to take advantage and use tax softwares like Turbotax to ensure you maximize your credits. 

 For example, children will automatically move to the female spouse’s account and she will receive the child tax benefits. In same-sex partnerships, either one of the partners may receive such benefits. Since your total family income may change when you get married, your Working Income Tax Benefit amount may also change. You’ll need to complete a new application, right away, if it is relevant in your situation.

Shari Talbot avatar on Loans Canada
Shari Talbot

Shari is a Freelance Writer, specializing in personal finance, business blog content and education. She enjoys taking complex information and putting it into a form the average consumer can understand. When she is not working, she homeschools her children, supports her husband in business, and enjoys traveling with her family.

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