Did you get married in 2017?

Congratulations! There are a couple things that are going to change regarding your personal taxes. 

 

 I just got married, do we need to file our taxes together?

Although it is not required that you file together as a couple, it is strongly recommended that a married (or common-law couple) file their taxes together.

There are a number of credits that can be shared and transferred between both partners, as well as a couple credits that are recalculated as a result of your new status.

Whether or not you chose to file your returns together, you must indicate on your tax return that you are married/common-law. Failure to do so will result in the reassessment of your tax return.

Am I considered common-law?

In Manitoba, you are considered common-law once you have cohabited (lived) in a conjugal relationship with another person for:

  • 12 months

OR

  • Any amount of time, while raising a child together

Note:

The child must be the natural or adopted child of both people OR the natural or adopted child of only one of the parties, if the other party is providing support to the child.

Having a child together doesn’t automatically make you common-law, you must be living together in a conjugal relationship.

I am already common-law with my partner, and now we’re getting married. Does anything change on our taxes?

Essentially no. CRA doesn’t differentiate between common-law and married for the purposes of income taxes. The credits that you have previously been sharing You do need to report on your T1 that you are now married, however you won’t notice any tax difference.

 

How do I change my last name with CRA?

If either or both of you changed your last name, you can file your tax return under your new name (and/or address), by filing your return with your updated information, you are updating CRA’s database.

 

Book your tax meeting with one of our tax professionals online today or by contacting one of our seven offices in Manitoba.

 

A couple things to consider for your taxes this year:

  1. Charitable Donations

As a couple, you are able to combine your charitable donations, to maximize the deduction you receive.

When/how is this beneficial?

 Donations claimed in excess of $200 get almost twice (46% vs. 26%) the deduction for every dollar donated over and above the initial $200.

Ex: If you and your partner each donate $150, you will receive an additional $20 in credits for combining your donations 

 

  1. Medical expenses

As a couple you are eligible to combine your medical expenses and claim them on the spouse that results in the greatest benefit. You can also claim the medical expenses for any children you are supporting as a couple (click here for Talbot and Associates fillable medical worksheet)

When/how is this beneficial?

Medical expenses can only be claimed on your t1 to the extent that the total of your medical expenses exceeds the lesser of $2,268 (for 2017) or 3% of your individual net income for the year.

Combining your medical expenses with your spouse’s can help bring your expenses past this threshold allowing you to claim medical expenses you wouldn’t be eligible to claim alone or allow a greater percentage of your incurred expenses to surpass this threshold and be claimed.

Ex: You and your spouse each earned $75,000 and each paid $1500 in medical expenses for 2017. Your medical expenses don’t meet the threshold to be eligible to claim separately. Combining your expenses for a combined claim of $3,000 allows you or your spouse to claim these expenses, and saves you $112 in taxes for 2017

 

  1. Spousal RRSP Contributions

As a couple you can now benefit from making spousal RRSP contributions. The higher your income, the more an RRSP deduction benefits you. If either you or your spouse earn more than the other, having the higher income spouse contribute to the RRSP of the lower income spouse, will maximize the deduction you receive from your RRSP contributions.

How does this work?

Ex: John makes $100,000/year and Jane makes $35,000.  If John makes the RRSP contribution in Jane’s name he will receive the deduction base in his income, which is higher, allowing him a greater deduction. The RRSP contribution will reduce John’s RRSP contribution room, which is higher than Jane’s since he earns more than her (RRSP room is calculated based on your income).

In turn when the time comes to withdraw the RRSPs, the withdrawal will be taxed on Jane’s return based on her income in that year 

 

  1. Pension Split

Pension split allows for the transfer of up to 50% of eligible pension income to be transferred from a higher income spouse to lower. Even if only one spouse is retired and receiving pension, you can still benefit from distributing pension income across both of you.

 

  1. Basic Personal Credit Transfer

Any credits that aren’t being used by either of you, they can be transferred from the lower income spouse to the higher.

 

  1. Moving Expenses

Are you moving in with your new partner? You may be eligible to claim a portion of your moving expenses! (see here for more information on claiming moving expenses)

 

  1. Personal GST credit

The personal GST credit is designed to help low to middle income individuals or couples by paying a predetermined credit amount quarterly

Each taxpayer in Canada is allocated a quarterly GST payment, calculated based on your annual income. If you have a spouse or common-law partner, only one of you can receive this credit. The credit is paid to the person whose return is assessed first. The amount will be the same, regardless of who (in the couple) receives it.

Failure to inform CRA of your change in marital status, cwill result in prior years’ GST credit being reassessed and prior amounts being clawed back.

 

  1. Property taxes/rent paid

If you were previously living separately and both claiming rent paid on your taxes, only one of you is now eligible to claim rent, or property taxes paid as a credit.

  1. Tuition transfer

As a couple you are now eligible to transfer any unused tuition amounts between spouses to the ensure you receive the greatest tax benefit.

When is this beneficial?

If either you or your spouse are a student and don’t make enough to claim all of your tuition in any year, you are eligible to transfer any unused credits to your spouse.

Ex: Jane and John got married in June 2017. Jane earned $56,000 in 2017 and John is a student and earned income of $10,000. Since claiming tuition on John’s return will not benefit him at his current tax bracket, through transferring the credit to Jane’s return, they are able to maximize their tax savings.

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