It’s important to understand how to take advantage of tax benefits at every stage of your life, and it shouldn’t just happen every April as you scramble to file your taxes. Being fully aware of what benefits are available to you at any given time during the year ensures that you will receive the refund you’re entitled to. As a request from a recently married friend and from my sister, I’m going to blog about common tax benefits for married or common-law partners. :)
Here are some of the most common tax benefits I can think of for married or common-law partners:
- Spousal RRSP contributions. This makes sense if one spouse makes significantly more income than the other. The higher income spouse contributes money in the lower income spouse’s RRSP, and can then claim the tax deduction. But most importantly, during retirement, both spouses will have a more balanced income, which means less income tax paid.
- The Home Buyers’ Plan (HBP). With the HBP, you are allowed to withdraw up to $25k from your RRSP to buy your build your first home. if you are buying a home with your spouse, you can each withdraw up to $25k, for a combined $50k towards your new home.
- The Lifelong Learning Plan (LLP). Similar to the HBP, under the LLP, you can withdraw up to $20k from your RRSP to pay for training or education. But the best part is, you can take it out for your spouse or common-law partner as well.
- Tax break for students. This is great if either you or your partner is eligible to claim tuition. The original claim must be made by the student, but if you’re a low income-student, you may not need to use the entire tax credit if you don’t owe taxes. This means any unused amounts up to a maximum of $5k can be transferred to the student’s spouse to help reduce their taxes. And as an added bonus, TurboTax offers a free version of their tax software specifically created for students!
- Medical expenses. Any qualifying medical expenses for either spouse should be combined and claimed on one person’s tax return – generally the partner with the lower taxable income.
The great thing about online tax filing software like TurboTax is that they will ask questions and help guide couples through the tax-filing process – making sure you don’t miss any relevant tax savings opportunities! :)
What other tax benefits can married or common-law partners take advantage of?
Note: this post is sponsored by TurboTax Canada, but was written and edited by me.
Life has been busy! I’ve been working a lot of extra hours at my full-time job, planning the Canadian Personal Finance Conference, working on some freelance stuff, have done a bit of volunteering, and have been trying to declutter my place – which has been put on hold for the past week or so.
Over the last few hectic months, I’ve been thinking about my home and how functional it is for me. I love the neighbourhood I’m in, and my home is really cute. But I’m beginning to realize that my life is pulling me further into Vancouver, and I’m still stuck out here in the suburbs. Most company head offices (including my own) are located in the city, my boyfriend lives downtown, and all of the fun activities I like doing are in the city, or more easily accessible from Vancouver. The commutes are killing my productivity (2-3 hours round-trip), and if I could have that time back, I feel like I could be doing a lot more with my days.
My place has rental restrictions, so unless a family member moves in, I’m not allowed to rent it out. So the only thing I can do, aside from staying, is to sell my place and move closer into town.
It’s a tough decision to make, and I’m not quite there yet. I’ve been a home owner for 4 years, and while I don’t think I’m in a position to sell this year, I’m thinking hard about putting my place on the market to sell next year. That eliminates having to pay a hefty mortgage cancelation fee, and it gives me time to figure out what my next move is going to be.
So until that time comes, I’ll just keep on getting rid of my stuff. It’ll mean less packing once I do eventually decide to move. :)
I’ve been experimenting with different ways of blogging about my monthly budgets. I’ve been showing you my Excel spreadsheet for so long that I wanted to change it up. I even thought about not posting my budgets anymore, but I think I still need them for me. :)
So here’s what I’m experimenting with this month – my budget based on percentages:
The above chart just shows averages. When I recap my budget at the end of every month, it’ll show the percentage of what I actually spent that month.
I also considering cutting back on the number of categories, and it would look like this:
Overall, I like showing percentages better because:
- It eliminates the dollar value so that we are really only focusing on what percentage of my income is going to each category.
- I based my previous budgets on my full-time income, and did not include what I did with my freelance income.
- You can see my savings rate in comparison to the rest of my monthly spending.
Switching to percentages means you can now see where all of my money is going, and even though I’d no longer be sharing dollar figures, I think this is a more transparant way to show my spending and savings.