Top 7 Tax Benefits for Married Couples in Canada
It’s not mandatory to file taxes together, but a must know what are the tax benefits for married couples in Canada. Read on, enlighten yourself & enjoy benefits.
Once you are married, so many things become mutual and common. The relationship brings together two persons, and they are agreed to share each other’s responsibilities and problems. It appears as a tentative scenario, but things are solved themselves.
Marriage undoubtedly comes with benefits in social and family life. But what else? Yes, they can share common financial management also. Another big YES to the question- Do married couples have to file taxes together in Canada? How?
Let’s get the answer in more detail through tax benefits for married couples in Canada.
What are the tax benefits for married couples in Canada?
There are many. Read on to know what benefits are waiting for you if you are married.
Spousal Tax Credit
Have you heard of Basic Personal Amount (BPA)? This federal tax credit gives you back your paid federal income tax. How is so? There is a BPA amount which is $13,229, $13,808, and $14,398 for the years 2020, 2021, 2022 respectively.
If your spouse has less income than the BPA amount, you can get the spousal tax credit. That will be the difference between the respective year’s BPA and your spouse’s income. If you didn’t know that, claim now!
One thing more, your income doesn’t have any influence on that.
Pooled Medical Expense
You’ll get more medical expense tax credit if you are married. Combine your medical expense with your spouse’s income that is lower. It can go vice versa. So, it’s again anyway. Your tax credit depends on your income. Combining a couple’s income will make it easier to reach and bring more tax credit for you.
One tax benefit for couples in Canada is- a husband/ wife can transfer their tax credits in an amount to their spouse. It helps reduce the remaining taxes that the other spouse owes.
There is a basic tax amount for a specific year, such as in 2017, it’s $11,635. A person can claim their spouse as a dependent who has a lower income than the basic tax amount.
If your spouse has a Registered Retirement Savings Plan (RRSP), consider putting some money in that. It will minimize your income tax bracket. It also helps your spouse, especially if they are over 71. Take the chance to help both of you until s/he reaches 71.
Splitting Dividends or Pension
You may split your earnings from investment dividends. Also, offer your spouse a portion of the pension you receive. You can thus save on taxes as you’ll have a lower income tax bracket.
Tax-Free Child Benefit
If you have a child, you can get tax-free child benefits from the government. Pay taxes together as a married couple and receive this monthly allowance as support. But don’t forget to file a tax return. Talk to your lawyer to know more about it.
The benefit of taxation doesn’t mean filing taxes together. But don’t you think that you should file taxes together if you are married? You’ve now got the tax benefits for married couples in Canada in front of you. At least it should be submitted as a couple. And what means that?
Is there any drawback to having a spouse in taxation?
There are some. But, these may not be big issues for you if you plan wisely.
- You may end up paying a portion of your spouse’s tax
- Selling a home won’t be tax-free for both of you as there will be one common residence for husband and wife
- Some benefits can be diminished
- There can be some peripheral loss in selling and purchasing identical assets
Once you start to pay your taxes as a couple, you’ll get some automatic benefits, and its nature is to dilate. You don’t have to pay twice the expense for paperwork or lawyer fees. You can save both time and energy. And, of course! There will be a lower amount to pay comparatively than paying separately.
Yes, paying tax together takes less and brings more for you. If you didn’t know that, thank me in advance. It’s going to be a big saving. Now plan what betterment can be done with the gift that is your own. As a piece of suggestion, don’t forget to pay your taxes on time. Help the government to help you and prosper the whole nation.
And, get married soon. It’s beneficial. You’ve just agreed on that.