The Canada Revenue Agency has specific requirements in place for married and common-law Canadians as they file their personal tax returns.
Married and common-law spouses do not file "joint" tax returns as is an option in the USA. Each Canadian files their own return and indicates their marital status on it, and the identity of that person. You do not get to decide whether not you claim your marital status on your tax return. Once you are married you must include your spouse. Once you are common-law which means you have been living together in a conjugal relationship for 12 months or immediately if you have a child then you must file as common-law you do not have a choice.
The CRA knows your true marital status based on information that you file, credits and deductions that you apply for and other information sent to them which relates to you. Since your marital status has a significant impact on your return - family incomes are combined for calculating income-tested benefits such as the GST/HST credit or the Canada Child Benefit. Couples also benefit from combining charitable donations and medical expenses. If you have received benefits that you are not entitled to you will be asked to repay them with a penalty and interest and failing to indicate your correct marital status is fraud.
If you were married in the tax year for which you are filing, you must note your status as married in the "information about you" section of your return, including information about your spouse including their name, social insurance number, net income and employment status. If your spouse claims credits such as the CCB or GST/HST or if they owe any payments you must report that as well. This is the same for common-law couples.
Advantages and Disadvantages of Filing as Married
1. If you both sold homes to buy one together only one of the sold properties may be immune from taxes. You may have to pay capital gains on one of the sales.
2. If you are a married student with extra tuition to deduct, you may transfer your unused deductions to your spouse.
3. If your partner's income is below a certain threshold you may be able to claim an additional tax credit.
4. You can pool your medical expenses and apply the deduction to the partner who can use it best to pay down their taxes, similarly with donations.
5. You can contribute to your common-law partner's RRSP which can be an advantage if you are in a long term relationship.
6. Splitting your pension income.
Filing Coupled Returns
Filing your spouse or partner's information on your return is pretty simple, however when it comes to deciding which expenses or credits to claim on each return it is more difficult and confusing. It might be in the best interest of both you to have your returns done by a professional who knows all the ins and outs of filing tax returns for couples, so as to avoid mistakes resulting in extra charges and penalties.
You also need to inform the CRA if your relationship ends as it may change the benefits due to you or the payments that you owe. If you receive the CCB or GST/HST benefit payments, notify the CRA the month after your relationship has ended. If you separate, you do not have to inform the CRA until the separation has lasted 90 days. You can inform the CRA by logging into your MyAccount and completing CRA form RC65, Marital Status Change, or by contacting the CRA directly by phone.
If you live apart for reasons other than the ending of your relationship you still have to file as married for example if you live apart for work, education or medical reasons you are still considered to be married by the CRA. Once you are married or divorced you will never be able to file again as single.
From an article by Turbo Tax November 2019
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