When you get married, or start living common-law, it can impact your tax situation. Some of the changes occur immediately (e.g., your eligibility for the GST/HST credit) and other changes impact you when you file your tax return. One thing that doesn’t change, however, is that you are both still required to file your own tax returns.
While it’s obvious that your marital status changes when you get married, many people are surprised to find out that (for tax purposes) they’re already living common-law. Under the Income Tax Act, your marital status changes to common-law when you’ve been living with your significant other for just 12 months.1
What happens when your marital status changes?
Here are some things to be aware of when your relationship status changes.
- Your entitlement to the GST/HST credit changes since it is based on “adjusted family net income”. Your adjusted family net income usually increases when you become married or common-law, so you might find that you no longer receive the GST/HST credit. If you are still eligible for the credit, only one of you will receive it, even if you were both receiving it before.2
- Your entitlement to the CCTB and the WITB change since these are also based on your adjusted family net income.
- You become eligible for the family tax cut.
- When you’re completing your tax return, you’ll need to provide information about your spouse or common-law partner, including his or her net income, for certain credits to calculate properly.
- If your or your partner’s income is less than $11,138 (2014 number), the other person will get a tax credit called the spouse or common-law partner amount.
- You can split or share certain credits. For example, if you both have medical expenses, one of you can claim them all to increase your refund. SimpleTax will automatically optimize your returns to take advantage of this.
- Whether your partner owns or has previously owned a home can impact your eligibility for the home buyer’s plan and home buyer’s amount.
- You can withdraw funds under the Lifelong Learning Plan from your RRSP for your partner to go back to school.
- If you are both supporting your children, the lower-income partner must claim the child care expenses, regardless of who actually pays them.
- The higher income person can contribute to a spousal RRSP, effectively splitting income if you and your partner are in different tax brackets.
It’s important to let the CRA know when your marital status changes. You can do this through My Account, by phone, or by filing a form RC65. You must also accurately report your marital status when filing your tax return—even if you don’t really feel like you’re living common-law.
1 You’re also living common-law if you’re living with a person who 1) is the parent of your child by birth or adoption, or 2) has custody of your child and your child is wholly dependent on your partner for support, regardless of how long you’ve been living together.
2 Don’t try to cheat the system by falsely filing your tax return or not reporting your marital status change. If you get caught you’ll be required to pay back any credits you shouldn’t have received, plus interest and penalties.