Can Married Couples File Taxes Separately in Canada?

One of the most often asked issues in Canada is “can married couples file Taxes separately in Canada?”. They want to be certain of their ideas on this. All employees are required to pay taxes on time as a good citizen in Canada. The amount of taxes varies depending on the person’s income. But if two self-employed people get married, the process may become completely different. They have the option of paying taxes jointly or separately.

Marriage is probably one of the sweetest moments of our lives. It alters our lives drastically. Along with that, marriage brings a lot of complications regarding money. That includes filing your tax returns. In Canada, there is no law related to “Joint” tax returns. However, whether you are married or not, you must file your taxes if you are a taxpayer. So, can married couples file taxes separately in Canada?

The answer to this question is not as simple as it may seem. If you are married or have a common-law partner, you must declare information regarding your spouse. Moreover, you can enjoy several benefits with it. Keep reading this blog you will get to know an in-depth guideline on this. But if you would like to have a consultant then feel free to ask your question to our Spousal Support Lawyer.

Tax Filing Options for Married Couples in Canada

Married couples in Canada have two options for filing their taxes: joint tax filing and separate tax filing. Each option has its own advantages and disadvantages, and the best option for a couple depends on their individual financial situation.

Joint Tax Filing

Joint tax filing is when both spouses combine their income and file a single tax return together. This is the most common tax filing option for married couples in Canada.

Advantages of joint tax filing include

• Simplicity: Joint tax filing is the easiest option for married couples as it requires only one tax return to be filed.
• Higher Eligibility for Tax Credits and Deductions: Joint tax filing allows couples to take advantage of certain tax credits and deductions that may not be available to them if they file separately.
• Lower Overall Tax Liability: In some cases, joint tax filing may result in a lower overall tax liability for the couple, especially if one spouse has a higher income.

Disadvantages of joint tax filing include:

Shared Responsibility: Both spouses are responsible for the accuracy of the joint tax return, including any errors or omissions.
Potential Increased Tax Liability: If one spouse has a large tax debt or other obligation, the other spouse may be responsible for paying it, even if they did not benefit from the debt or obligation.

Separate Tax Filing:

Separate tax filing is when each spouse files their own tax return based on their individual income.

Advantages of separate tax filing include:

• Individual Responsibility: Each spouse is only responsible for the accuracy of their own tax return.
• Avoidance of Joint Responsibility for Debt or other Obligations: If one spouse has a large tax debt or other obligation, the other spouse is not responsible for paying it if they file taxes separately.

Disadvantages of separate tax filing include

• Complexity: Separate tax filing requires each spouse to file their own tax return, which can be more complicated and time-consuming than joint tax filing.
• Reduced Eligibility for Tax Credits and Deductions: Some tax credits and deductions may not be available to spouses who file their taxes separately.
• Potential for Higher Overall Tax Liability: In some cases, separate tax filing may result in a higher overall tax liability for the couple, especially if one spouse has a lower income.

Can Married Couples File Taxes Separately in Canada?

Definitely, married couples can files taxes separately in Canada. But, the wisest choice would be to file the taxes together as a married couple in Canada. The best reason behind such a decision is that it will reduce the overall tax you pay for the year. When you decide to pay taxes separately even after being married, the liabilities on the tax amount will be much higher. Conversely, filing taxes together will reduce the penalty on the tax amount. If your income reaches a threshold amount, the facilities you can redeem will get phased out. However, filing taxes together will raise the threshold amount than filing taxes separately.

Furthermore, the income difference between you and your spouse plays almost a decisive role here. For instance, if your total earnings are a lot higher than your spouse’s, the overall household income becomes low. In turn, this will reduce the tax return as well. Therefore, you and your spouse should decide to file taxes together as a married couple.

How to File Taxes Separately in Canada?

Filing taxes separately in Canada can seem complex, but it is a straightforward process that can be completed by following these steps:

Requirements to File Taxes Separately in Canada

Before you start the process of filing taxes separately, make sure that you meet the following requirements:

• You must be legally married.
• You must have separate income sources.
• You must have separate tax returns.

Steps to File Taxes Separately in Canada

• Gather all necessary information: Collect all of your personal and financial information, including your T4 slips, RRSP contributions, and any other relevant documentation.
• Complete your own tax returns: Use the information you have gathered to complete your own tax returns. You can use tax software or a paper return, but it is recommended to use tax software for accuracy.
• File your tax returns: File your tax returns by the deadline, which is typically April 30th of each year. You can file your tax return online or by mail.

Tips for Filing Taxes Separately in Canada

• Keep records of all expenses and income: Keeping accurate records of all expenses and income can help you avoid mistakes when filing your tax return.
• Consider hiring a tax professional: Hiring a tax professional can help ensure that your tax return is accurate and complete, and can also provide advice on how to optimize your tax liability.
• Make sure to transfer any tax credits: If you are entitled to a tax credit, make sure to transfer it to your spouse if they are eligible to use it.

Filing taxes separately in Canada is a simple process that can be completed by following the steps outlined above. By keeping accurate records, hiring a tax professional, and transferring tax credits if necessary, you can ensure that your tax return is accurate and that you receive all the tax benefits you are entitled to.

Do Married Couples Have to File Taxes Together in Canada?

Do married couples have to file taxes together? There is an option to choose whether you and your spouse want to file taxes together or not. Filing taxes with your spouse is a choice in Canada. No law demands you to file taxes together. However, it is crucial to understand the standard requirements before deciding which side you will be leaning towards.

One of the most important factors to know is the marriage period. Simply put, you and your spouse will be determined as a married couple throughout a year if you have married before 31st December of that particular year. As a result, deciding on filing the taxes together means that you can pay joint taxes for the whole year.

Furthermore, the overall period of marriage is not exclusively essential to determine whether you can file taxes together or not. For example, as a legally married couple, you do not have to be married for a specific period to be eligible to file taxes with your spouse. On the other hand, you must be living together for a straight 12 months as a common-law couple to file taxes jointly in Canada.

Spouse or Common-law Partner Amount

The spouse or common-law partner amount is a non-refundable tax credit. The credit is created to assist families where one spouse is financially responsible for taking care of the other spouse. According to this amount, you are eligible not to pay taxes as long as you do not earn more than around $14,000 in a year.

In case you are filing taxes when separated but married, you have choices as well. First, you can decide to claim the total sum of exempted support amount in that particular year to your spouse or common-law partner. This amount must be on line 22000 of your return. Apart from this, you can also claim the deductible support amount on line 30300 of your return. However, you must choose any one of the options.

Claiming Spousal Amount

In every country, a citizen has the right not to pay taxes unless he or she earns over a certain amount of income. In Canada, this amount is around 14,000 CAD. If your spouse earns less than this minimum amount of payment, you can claim the difference as a non-refundable spousal tax credit. This will reduce the federal tax amount you owe.

For instance, let’s assume your spouse is a student who earned 6,000 CAD from part-time job earnings throughout a whole year. On the other hand, your income in that year was 70,000 CAD. In this situation, it is evident that your spouse earned less income than the minimum threshold to pay taxes. As a result, you can claim a non-refundable tax credit on the spouse’s amount of earnings. This amount is the difference between the annual threshold amount and the yearly earning of your spouse from the part-time job.

Furthermore, you must remember that any spousal tax credit is also entitled to add an appropriate provincial amount of money. Therefore, when you claim the spousal amount on your tax return, this regional amount is deduced. This can save a lot of money for your family expenses.

Claiming Single on Taxes when Common Law

Being eligible as a common-law couple enables you to determine that you want to file taxes as common law. For this, you and your spouse have to file each of your taxes to the Canada Revenue Agency (CRA). You must include the pieces of information of your common-law partner when you are putting your information. This includes mentioning your partner’s name, social security number, and the net income of your partner.

But what happens when you claim single on taxes when common law? If you are doing such a thing, you would be considered as a fraud who committed a fraudulent act. As a result, you may end up facing inevitable consequences for your actions.

What Is the Penalty for Filing Single When Common Law?

If you and your partner have been living together for more than 12 months straight, you are considered a common-law couple. Any common-law partner must file taxes jointly, which has several advantages. Some of the benefits include being eligible to combine medical receipts and expenses, claiming the Family Tax Cut, contributing to a spousal RRSP, and many more.

However, if you file taxes as single when common law, you will face specific penalties for your actions; first of all, you will be reassessed for all the unpaid taxes with interest. Eventually, you will be ordered to pay the missed taxes not only with an interest amount but also with penalties. In addition to this, you will be denied any benefits from CPP. Finally, you may end up being rejected any pension benefits if your case is found to be deliberately and strategically fraudulent.

How Can a Lawyer Help With Filing Tax?

You might not understand the additional amount that the tax firm calculates to be given as a tax. In order to compile the entire file and to determine the suitable amount based on your income, it is therefore preferable to speak with an experienced family attorney. A lawyer can also provide you with all tax-related legal guidance. We have skilled attorneys on hand to help you with these issues.

Conclusion

Can Married Couples File Taxes Separately in Canada? Often, couples are benefited from filing taxes together in Canada. This is true when the income difference of the spouses or common-law partners is more considerable. However, couples having almost the same earnings can also experience lower taxes through sharing deductions and credits. Nevertheless, you should choose the best option where you do not pay more taxes than you should.

FAQs

Is it better to file taxes jointly or separately in Canada?

In general, filing a joint return is a great choice if you want to reduce your tax burden. Because so many facilities are phased out once income exceeds certain thresholds, filing a joint return typically results in lesser tax burden.

When should married couples file separately?

In most cases, filing jointly makes financial sense for married couples. However, filing separately might be a better idea if one spouse has considerable medical costs or other itemized deductions, or if both spouses earn roughly the same amount of money.

Can you file taxes separately Canada?

There is both option available regarding this. But, it is always recommended to file jointly with you spouse for the financial benefits.