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Filing Tax Returns When You Have a Spouse / Marital Status
Spousal tax returns are always filed separately - that is, the tax returns are prepared separately. However, when tax returns are prepared using personal income tax return software, most software will give the option of "coupling" the preparation of both returns. The returns are still printed and filed separately, but the software will usually highlight ways in which taxes may be reduced, and will automatically apply the spousal amount tax credit if eligible.
You are required to report what your marital status was as of December 31st of the tax year. This is done by ticking the appropriate box on page 1 of the tax return. The boxes include:
You are married or living common-law as long as you and your spouse are not living separate and apart from each other on December 31st because of a breakdown of the marriage or common-law relationship. If you are living apart from each other due to some other reason, including your spouse living in another country, you would still be considered married or living common-law.
See the Canada Revenue Agency (CRA) information on Marital Status, and When to Update Your Marital Status (link at bottom). In general, a marital status change should be conveyed to CRA by the end of the month in which your status changed, unless it is a separation - report after being separated for more than 90 consecutive days. Once you have been separated for 90 days because of a breakdown in the relationship, the effective date of your separated status is the date you started living separate and apart. So, if you separated prior to December 31, 2018 and were separated for 90 consecutive days, the status on your tax return for 2018 would be "separated".
You must report the name, social insurance number and net income (or the amount the net income would be if he/she filed a return) of your spouse or common-law partner on page 1 of your tax return. The spouse net income affects some tax credits, including the spousal amount tax credit.
What Does Combined Net Income Affect?
The combined income of you and your spouse or common-law partner is used to calculate:GST/HST credit
Canada child benefit (CCB)
provincial low income tax reductions and some tax credits - see the information for your province.
BC Fair Pharmacare thresholds
BC Medical Services Plan (MSP) premiums - no longer applicable
If one spouse is unemployed or has very low earnings, the other spouse can claim a spousal tax credit. See the tables of non-refundable personal tax credits for the federal and provincial territorial amounts of the spousal tax credit.
There are some tax credit amounts which can be combined and claimed on either spouse's return:
Expenses for both spouses should be combined and claimed on the tax return of one spouse. It is often better to claim all medical expenses for both spouses on the return of the spouse with the lowest taxable income. This is because the medical expenses tax credit is for expenses in excess of the lesser of 3% of net income or a specified threshold. 3% of net income will be lower for the lower income spouse. This is a tax credit, not a deduction, so the rate applied to the medical expenses to calculate the tax credit will be the same for either spouse. However, if the lower income spouse won't have sufficient income tax to offset the tax credit, then it may be better to be claimed by the higher income spouse.
Donations for both spouses should be combined and claimed on the tax return of one spouse, because the tax credit for the first $200 of donations is at the lowest tax rate. It often doesn't matter which spouse, because normally the tax credit will be the same amount for either spouse. However, if the higher income spouse has some income taxed at the highest federal tax rate, then the tax credit will be a higher amount for that spouse. You have to ensure that the donations are fully utilized, which also may work better for the higher income spouse. The Canadian Tax Calculator will indicate if the donations are not fully utilized.
Some tax credits can be claimed by either spouse, or apportioned between spouses:
Canada caregiver credit - 2017 and later years
Adoption expensesine 31300 (line 313 prior to 2019) - on Canada Revenue Agency (CRA) website
Amounts no longer available that could be claimed by either spouse, or apportioned between them:
Public transit amount line 364 - eliminated July 1, 2017 federally
Children's fitness amount line 365 - not available 2017 and later years
Children's arts amount line 370 - not available 2017 and later years
Caregiver amount line 314 - 2016 and earlier years
Amount for infirm dependants age 18 or older line 306 - replaced by line 30425 for 2017 and later years
Family tax cut (FTC) line 423 - 2014/2015 only - could be claimed by either spouse, but not apportioned between spouses
The deduction (not tax credit) for child care expenses must generally be claimed on the tax return of the spouse with the lowest net income.
Note: Line 32600 was line 326 prior to 2019
If one spouse (or common law partner) cannot use all of the following tax credits, they can be transferred to the other spouse by completing Schedule 2 of the tax return:Age amount line 30100 (line 301 prior to 2019)
Tuition education and textbook amounts line 32300 (line 323 prior to 2019) (these can also be transferred to a parent or grandparent
The transfer of the above amounts is done automatically by tax return software and by the Detailed Canadian Tax & RRSP Savings Calculator, with some input required.
- The taxpayer must input the amount of tuition/education amounts to transfer. In the TaxTips.ca detailed calculator this is done in the student tax credits area.
- The Family Caregiver amount for children under 18 is claimed in the Dependants tab of the TaxTips.ca detailed calculator.
When one spouse resides in a different province from the other, federal credits can still be transferred using Schedule 2 of the tax return. This is as long as the eligibility requirements are met. If you and your spouse were separated because of a breakdown in your relationship for a period of 90 days or more including December 31st of the taxation year, no unused amounts can be transferred from one spouse to another. See Amounts transferred from your spouse or common-law partner line 32600 (line 326 prior to 2019) on the CRA website.
Provincial credits can also be transferred using the provincial schedule 2 of the spouse to whom the unused credits are being transferred. The calculation of any credits being transferred would be done using the forms of the province of the spouse to whom the unused credits are being transferred. There are exceptions to this for Prince Edward Island, Manitoba and Quebec.
Jane lives in BC, and would like to transfer unused age and disability amounts to her husband John, who lives in Alberta. John would claim the unused amounts by completing Alberta Schedule 2 and the Alberta provincial worksheet, as well as form AB428 for Jane as if Jane were a resident of Alberta.
You'll see that on the provincial Schedule 2 (for example, Alberta) it indicates "If at the end of the year your spouse or common-law partner was not a resident of Alberta, special rules may apply. For more information, contact the Canada Revenue Agency." If you are in doubt about how to do this, please contact a tax professional.
If one of you is residing in another province because of work, it's possible that you both could still be residents of the same province see our article For Which Province do I File a Tax Return?
When investments are held in a joint account, the investment income (including capital gains) should be reported based on the funds contributed to the account by each spouse. If the funds were provided equally by both spouses, then the investment income would be split equally. This subject is covered in the CRA web page Interest and other investment income line 12100 (line 121 prior to 2019), under the topic of Bank accounts.
In order for the lower income spouse to be able to claim more investment income, finances should be arranged so that the lower income spouse has money to invest.
Persons with Disabilities - links to all related information
Canada Revenue Agency (CRA) Resources
Tax Tip: Try to arrange your finances so that both spouses have equal income before and after retirement.
Revised: October 26, 2023
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