If you’re married or in a common-law relationship, it’s important to inform the Canada Revenue Agency (CRA) and, if applicable, Revenu Québec, about your marital status. Tax Implications for Married can help you optimize your benefits and prevent potential tax problems in the future. Here’s a brief overview of what you need to be aware of regarding taxes and your marital status.
Tax Implications for Married to the CRA and Revenu Québec: What You Need to Know
Congratulations on your marriage! As you embark on this wonderful journey, it’s crucial to consider how this life-changing event can impact your tax situation. Keeping the Canada Revenue Agency (CRA) and Revenu Québec informed about your marital status is an important step in this process.
Both the CRA and Revenu Québec require that you notify them of any change in your marital status by the end of the month following the month in which the change occurs. For instance, if you get married in October 2020, it is necessary to inform the CRA and/or Revenu Québec no later than November 30, 2020.
Changes in your marital status can have implications on the benefits and credits you are eligible to claim on your tax return for tax implications for married. By keeping the CRA and Revenu Québec updated, you can ensure that you maximize your entitlements and avoid incorrect claims that may result in having to repay the government.
Understanding the Distinctions: Marriage vs. Common-Law Relationships
The disparity between being married and living common-law lies in a few key factors. For married couples, they can claim their marital status as soon as they partake in a civil or religious ceremony, irrespective of whether they reside together or not. On the other hand, common-law couples must cohabit for a continuous 12-month period to be recognized as common-law for tax purposes. However, if they have children together, they are considered common-law as soon as they commence living together.
If you are unsure about your marital status, refer to this blog for further clarification.
Also read: Demystifying Income Taxes in Canada: A Comprehensive Guide
Separation from Spouse or Common-Law Partner: Tax Implications
In the case of a common-law relationship, you and your partner must remain apart for a minimum of 90 days for the CRA and Revenu Québec to acknowledge an official separation. During the year of separation, the claim for the spouse or common-law partner amount is calculated based on your partner’s net income before the separation date, rather than for the entire year.
If you reconcile within the 90-day period, there are no tax consequences to be concerned about. However, if you had custody and control over a dependent during the separation and were not living with or receiving support from your spouse, you may be eligible to claim an amount for the eligible dependent.
For legally married couples, official separation is only recognized by the CRA and Revenu Québec upon obtaining a divorce, even if you live apart for 90 days. However, certain credits and deductions may no longer be accessible if you have been separated for at least 90 days.
Updating Your Marital Status with the CRA
To notify the CRA of your relationship status change, you have several options:
- Access the CRA’s My Account service, log in, and click the Update button located in the Marital status section under Personal profile.
- Call 1-800-387-1193 to speak with a representative from the CRA.
- Complete and mail the RC65 form, titled “Marital Status Change,” to the tax center responsible for assessing your return.
Informing Revenu Québec about Changes in Marital Status
The process of notifying Revenu Québec about changes in marital status varies depending on the benefits you receive. For instance, if you receive child assistance payments, you must contact Retraite Québec by calling 1-800-667-9625. Revenu Québec also offers an online Change in Conjugal Status form that can be utilized for this purpose.
Also read: The Role of Professional Accountants in Cloud Accounting for Canadian Businesses
The Link Between Tax Credits, Benefits, and Your Partner’s Income
It is essential to keep in mind that when you get married or enter a common-law relationship, there may be changes in the amounts of benefits and tax credits you are accustomed to receiving. The Canada Revenue Agency (CRA) and Revenu Québec consider the combined income of both spouses to determine eligibility and allocation of credits and benefits. For instance, if you have childcare expenses, only the spouse or common-law partner with the lower net income can claim them. Moreover, a change in your marital status can also impact the amounts received for the Canada Child Benefit (CCB) and the GST/HST payment.
On a positive note, as a spouse or common-law partner, you may qualify for various credits or benefits that could potentially increase your tax refund. These include:
- The spouse or common-law partner amount if you supported your spouse and their net income was below $13,229 in 2020.
- Combining medical expenses and charitable donations.
- Contributing to your spouse’s RRSP (Registered Retirement Savings Plan).
- Splitting pension income.
Filing Taxes: Can my Partner and I Submit a Joint Return?
According to the Canada Revenue Agency (CRA), both you and your spouse or common-law partner must file individual tax returns. However, you have the option to prepare and submit your returns separately (as individuals) or jointly (as a couple).