Should me and my spouse file our taxes together?
Spousal tax returns are always filed separately – that is, the tax returns are prepared separately. 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 married or living common-law if 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.
The combined income of you and your spouse or common-law partner is used to calculate:
• GST/HST credit
• Canada child tax benefit (CCTB)
• Guaranteed Income Supplement (GIS)
• working income tax benefit
• refundable medical expense supplement
Claiming tax credits and deductions with a spouse
If one spouse is unemployed or has very low earnings, the other spouse can claim a spousal tax credit.
There are some tax credit amounts which can be combined and claimed on either spouse’s return:
Medical expenses – 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.
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.
Some tax credits can be claimed by either spouse, or apportioned between spouses:
• amount for infirm dependants age 18 or older
• public transit amount
• children’s fitness amount
• children’s arts amount
• home buyers’ amount
• adoption expenses
• caregiver amount
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.
If one spouse (or common law partner) cannot use all of the following tax credits, they can be transferred to the other spouse
i. line 301 age amount
ii. line 316 disability amount
iii. line 314 pension income amount
iv. line 323 tuition and education amounts (these can also be transferred to a parent or grandparent
Investment Income Earned in a Joint Account
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. 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.Add to favorites