If you recently got married, congratulations! You should know that getting married changes your tax situation. Here are a few tips to help you prepare for the tax filing deadline of April 30th and build your wealth with your new spouse:
- Inform the Canada Revenue Agency (CRA) of your marital status change
Tell the CRA (and/or Revenu Québec) about your marital status change as soon as possible so that they can determine the benefits you’re entitled to. As a married couple, you get several tax benefits such as the transfer of certain amounts between you and your spouse to lower tax payable amounts. On the other hand, if one or both of you were receiving certain credits like the GST/HST credit, you might not be eligible to receive this credit once you’re married. If you don’t tell the relevant agency about your marital status change right away, you might have to repay benefits or credits you’ve already received.
- Prepare your tax returns together
As a couple, you should prepare your tax returns together. This will make sure that you get the most out of the credits and deductions that you’re entitled to. For example, if you supported your spouse during the year and his or her net income is less than $11,474, you can claim an amount for your spouse and lower your taxes. If you don’t need certain credits such as the tuition amount or the disability amount to reduce your taxes, you can transfer it to your spouse to lower his or her tax payable. You can also pool your donations, public transit amounts, and medical expenses, and claim them on one return to maximize your refund.
Contribute to a spousal RRSP
If you haven’t already done so, opening an RRSP will not only help you save for your retirement but will give you a deduction on your tax return. Now that you’re a newlywed, you could make contributions to your spouse’s RRSP which will reduce your RRSP deduction limit but could save you money when you retire if your spouse has the lower income.
- Save in a Tax-Free Savings Account (TFSA)
You can save throughout the year in a TFSA and grow your money tax-free! At the end of the year, if you owe taxes, you can still transfer money from your TFSA to your RRSP before the contribution deadline. This will allow you to deduct your RRSP contribution on your tax return. If your spouse has unused TFSA contribution room, you can make a contribution to his or her TFSA.