Common-Law Couples: Filing Taxes Separately, Possible?

In Canada, common-law couples are not allowed to file joint tax returns. Instead, they must file single returns and indicate their status as being in a partnership. This means that each person in the couple files their own tax return, but must include information about their spouse, such as their name, social insurance number, net income and employment status. While it is considered tax fraud to file as single without claiming your accurate common-law status, some couples may choose to file separately as it can be a better tax strategy.

Common-law couples in Canada must file single returns and mark that they're in a partnership

If you were married or in a common-law relationship in the tax year for which you are filing, you must note your status in the "information about you" section of your tax return. This includes information about your spouse, such as their name, social insurance number, net income, and employment status.

Your tax preparation software may include an option to prepare a 'coupled' return. This means you enter the information for you and your spouse together, but you file separately once you have completed your tax return. By using this method, the software maximises the benefits for the couple as a whole while still generating two separate returns.

It is considered tax fraud to file as single without claiming your accurate common-law status. If you fail to list your common-law status, there may be penalties relating to benefits you receive that you would not have qualified for if you listed your common-law partnership.

Common-law couples in the US are allowed to file joint returns

If you are in a common-law relationship, it is important to note your status as such in the "information about you" section of your tax return. This includes providing information about your spouse, such as their name, social insurance number, net income, and employment status.

Your tax preparation software may include an option to prepare a 'coupled' return, which means you enter the information for both you and your spouse together, but you file separately once you have completed your tax return. This method allows you to maximise the benefits for the couple as a whole while still generating two separate returns.

It is important to note that failing to list your common-law status accurately on your tax return can result in penalties relating to benefits you receive that you would not have qualified for if you had listed your common-law partnership.

Common-law couples can use tax credits that their partner is eligible for

In Canada, common-law couples are not allowed to file joint tax returns. Each person must file their own tax return and indicate their marital status and the name of their partner. However, common-law couples can use tax credits that their partner is eligible for. For example, they can claim the federal and provincial spousal amount tax credit if they supported their partner financially during the year. They can also transfer unused tax credits to their partner to reduce their household tax rate. These include post-secondary education credits, the Disability Tax Credit, the age credit (for those 65 years and older), and pension income amounts.

Common-law couples can also share non-refundable tax credits with their partner to reduce their overall tax liability. For example, they can split pension income with their partner to reduce their individual incomes and pay a lower tax rate. They can also pool certain expenses, such as medical expenses for themselves, their spouse, children under the age of 18, and other dependents, and have one spouse claim the total. Additionally, they can combine charitable donation credits and have one partner claim the combined amount of both of their donations, achieving significant savings if the total amount is over $200.

Common-law couples can prepare a 'coupled' return, which means entering information together but filing separately

Common-law couples can prepare a coupled return, which means entering information together but filing separately. This is because, unlike in other countries such as the United States, Canadian tax rules don't allow spouses or common-law couples to file joint income tax returns. Instead, each Canadian files their own tax return and indicates their marital status and the name of their significant other on the return.

If you were married or in a common-law relationship in the tax year for which you are filing, you must note your status in the "information about you" section of your tax return, including information about your spouse – their name, social insurance number, net income and employment status. Your tax preparation software may include an option to prepare a 'coupled' return, which means you enter the information for you and your spouse together but you file separately once you have completed your tax return. By using this method, the software maximises the benefits for the couple as a whole while still generating two separate returns.

It is considered tax fraud to file as single without claiming your accurate common-law status. Common-law couples in Canada are not allowed to file a joint return; instead, they each file single returns and mark that they're in a partnership. If you fail to list your common-law status, there may be penalties relating to benefits you receive that you would not have qualified for if you listed your common-law partnership.

In some instances, it may be better to file taxes separately in terms of tax strategies.

Common-law couples filing as single without claiming their accurate common-law status is considered tax fraud

If you were married or in a common-law relationship in the tax year for which you are filing, you must note your status as in the 'information about you' section of your tax return, including information about your spouse – their name, social insurance number, net income and employment status.

Your tax preparation software may include an option to prepare a 'coupled' return, which means you enter the information for you and your spouse together but you file separately once you have completed your tax return. By using this method, the software maximises the benefits for the couple as a whole while still generating two separate returns.

However, in some instances, it may be better to file taxes separately. Many couples don't realise that filing separately might be the better move, in terms of tax strategies.

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