How a change in your relationship affects your taxes
Relationships are complicated, and whether you’re moving in together or moving on, it’s good to remember that a change to your marital status can impact your government benefits. Though it’s probably not on the top of your to-do list right now, it’s important to register your change in marital status with the Canada Revenue Agency (CRA) after you get married or become common-law, so your benefits can be calculated correctly. On the flip side, if you’re separating from your spouse or partner, you need to keep the CRA looped in too, but wait until you have been separated for 90 days.
We’re not experts in all things love, but we do know a thing or two about taxes, so we’ve taken a look at a few of the benefits that are affected by your marital status, and walked you through what you need to know.
The GST/HST Credit: This credit is calculated based on your combined household income. So, if you’ve gotten married or are officially common-law, your new marital status doesn’t make you ineligible, but adding together both of your incomes might impact the amount receive. If you’re separating, this credit would go back to being calculated on your income alone.
The Canada Child Benefit (CCB): This credit is meant to help with the costs of raising a child, and just like the GST/HST credit, it’s calculated based on combined household income. The same rules apply, and the amount you receive could go up or down if your marital status changes. If your family receives the monthly CCB, it’s really important to keep your marital status is up-to-date with the CRA. Until they hear otherwise, they’ll continue to send you benefits based on the income in your home when your child was born. Since CCB can be several hundred dollars a month for some families, repayments can quickly add up if you’re found owing.
The Working Income Tax Benefit (WITB): The amount you receive for this credit is not affected by a change of marital status during the year. It is based on your marital status and combined incomes on December 31.
And now for the good news! Your new marital status could allow you to take advantage of other tax perks, like pooling receipts for maximizing credits or the spousal amount, which is only available between spouses and common-law partners.
Though the timing might not seem ideal, try to keep the CRA in the know when your marital status changes. It’s pretty likely that this change in your life will affect your eligibility for government benefits, and it’s way easier to loop in the CRA ASAP, rather than sort through overpayments or penalties down the road.
Not sure if your marital status changes mean changes for your taxes? A Tax Expert at H&R Block can help walk you through changes to your benefits, and uncover other credits or deductions you might qualify for. Ready to file? Find an office near you, or do it yourself with our free online software.