Keith Mack
The decision to file as single or common law can be a tricky one, with many factors to consider. In Canada, for example, the Canada Revenue Agency (CRA) requires married or common-law couples to file their personal income tax returns separately, indicating their marital status and who they are married to or living with. While some believe that filing as common law can result in financial losses and a reduction in school credits, others argue that it offers benefits such as spousal credits and the ability to transfer unused tuition credits. Understanding the implications of each option is crucial before making a decision, especially considering the potential for legal consequences if incorrect filings are made.
| Characteristics | Values |
|---|---|
| Can common-law spouses file as single? | No, each Canadian files their own tax return and indicates their marital status on the return, and who they are married to / living with. |
| Benefits of filing as common-law | If one has little to no income, the higher-income spouse can claim a spousal amount; a lower-income spouse can choose to transfer some of their unused tuition credits in the year to their spouse; one spouse can claim the other spouse. |
| Drawbacks of filing as common-law | It may cost more money and you may lose out on school credits. |
Common-law rules
The CRA's common law rules are simple: if you have been conjugal for 12 months, filing common law is correct. The implications are that your household income is considered for some credits, such as the GST credit. There are also other credits that come into play, such as spousal credit, if one spouse is dependent on another and meets the criteria.
Some benefits of filing common-law are that if one has little to no income, the higher-income spouse can claim a spousal amount; a lower-income spouse can choose to transfer some of their unused tuition credits in the year to their spouse; and one spouse can claim the other spouse.
There are also potential drawbacks to filing as common-law. For example, you may lose out on school credits.
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Tax credits
In Canada, common-law spouses cannot file joint income tax returns. Each Canadian files their own tax return and indicates their marital status on the return, and who they are married to/living with.
There are several benefits to filing as common law: if one spouse has little to no income, the higher-income spouse can claim a spousal amount; a lower-income spouse can choose to transfer some of their unused tuition credits to their spouse; and one spouse can claim the other spouse as a dependent, if they meet the criteria.
However, some people believe that filing as common law can cost you money and make you lose out on school credits.
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Spousal amount
In Canada, common-law spouses cannot file joint income tax returns. Each person must file their own tax return and indicate their marital status and who they are living with.
There are several benefits to filing as common-law. For example, if one spouse has little to no income, the higher-income spouse can claim a spousal amount. A lower-income spouse can also choose to transfer some of their unused tuition credits to their spouse.
There are also drawbacks to filing as common-law. For example, one source notes that filing as common-law would cost them a lot of money and make them lose out on school credits.
The Canada Revenue Agency (CRA) has rules in place for married or common-law Canadians as they file their personal income tax returns.
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Tuition credits
In Canada, common-law spouses are not allowed to file joint income tax returns. Each person must file their own tax return and indicate their marital status and who they are living with.
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Marital status
In Canada, common-law spouses are not allowed to file joint income tax returns. Each person must file their own tax return and indicate their marital status on the return, as well as who they are married to or living with.
There are several benefits to filing as common-law. For example, if one spouse has little to no income, the higher-income spouse can claim a spousal amount. A lower-income spouse can also choose to transfer some of their unused tuition credits to their spouse. Additionally, one spouse can claim the other spouse as a dependent if they meet the criteria.
However, some people believe that filing as common-law can cost a couple a lot of money and make them lose out on school credits. There is also a concern that if a couple does not file as common-law, the government can audit them and make them pay back everything they owe plus interest.
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Frequently asked questions
If one spouse has little to no income, the higher-income spouse can claim a spousal amount. A lower-income spouse can also choose to transfer some of their unused tuition credits to their spouse.
Some people believe that filing as common law can cost more money and make you lose out on school credits.
In Canada, each person files their own tax return and indicates their marital status on the return. You do not get to decide whether to claim your marital status on your tax return. Once you are married, you must include your spouse.
