Should my partner and I claim our taxes together?

February 11, 2009 7:22 PM

Should my partner and I file taxes separately or jointly? (Canada)

My partner and I recently bought a home together (June) so we're not technically common-law married yet. He (25 years old) makes roughly $30,000 a year and I (23 years old) make roughly $22,000 (scholarships and teaching/research assistant jobs).

Would it be better for us to file together, or separately? We've heard from friends that it's probably better to file separately, but we're not sure why.

posted by DorothySmith to work & money (4 answers total)

The benefit to filing completely separately (i.e. not acknowledging a common-law relationship or anything) is that your two incomes will not be combined to calculate your "family" income.

Family income is used to determine what you are eligible for in terms of provincial and federal benefit programs. For example when I was a grad student with a similar income to yours I got GST refund cheques a few times a year, and I didn't have to pay any premiums for my MSP healthcare benefits here in British Columbia. If my income had been combined with a partner who made $30,000 I would not have been eligible for these benefits.

Also note that Revenue Canada does not count scholarships as taxable income, so as far as they are concerned your income will only be made up of whatever you make as a teaching assistant.
posted by sanitycheck at 7:38 PM on February 11, 2009

There is no option to file jointly or separately in Canada. You must both file tax returns. If you have a common law relationship (i.e. have lived together for more than 12 months (it doesn't matter when you bought a home together)), you must indicate so on your tax returns and fill in the appropriate information from your partner's return. As you indicate that you aren't yet common law, you shouldn't include anything from your partner's return. Legally, you don't have the option of choosing to be common law or not for tax purposes.

Here is an interesting article that deals with the issues about who is and isn't in a common law relationship. If you have been living together for more than 12 months and you call someone your partner (and live together) there isn't really any grey area though.
posted by ssg at 8:54 PM on February 11, 2009

Seconding ssg, if the case is that you don't have the option.

But if you somehow do have the option, you should fill one out jointly, and then do it independently as well. See which one has the greater benefit to you (as a couple), then file that one.

Good luck.
posted by hal_c_on at 11:10 PM on February 11, 2009

ssg is right - If you have been living together for 12 months you have to file together. But if somehow you have a choice (i.e. you weren't living together before you bought the house) then you should file separately (IMHO) in order to not have your incomes lumped together as one "family" income and lose the benefits the government gives to low income families.

Also, if you do not file together even though you *are* commonlaw, it may come back to bite you later. I heard of a couple who lived together but did not file as commonlaw for years, then when they got married (and filed as such) they were made to pay back all the GST rebates they had been paid while they were living together but filing separately.
posted by sanitycheck at 12:16 AM on February 12, 2009