A family that prays together stays together but if a family wants to stay ahead financially, they need to file their taxes together too. The Canadian government has tailored tax benefits that would cater to families with young children, families having senior parents living with them or families with children in college/ university. In order to reap the maximum benefit, it is extremely important that families plan and file their taxes together.
Following are the benefits of filing your taxes together:
- Family Tax Cut: If you are married with a child under 18 years of age, you may be able to save up to $2000 in taxes by splitting income with the spouse
- If you are a couple where one spouse goes to school while other earns taxable income, you can transfer up to $5000 of tuition tax credit to the spouse that earns and save hundreds of dollars in taxes
- If your spouse is not working, you can claim a spousal amount deduction of up to $11,138
- If you are paying for the college / university tuition of your child, he/she can designate up to $5000 of tuition tax credit to you and help you reduce your taxes
- The donations and transit passes can be combined and claimed on the higher income spouse to get maximum benefit
- The medical expenses can be clubbed and claimed on the lower income spouse in order to have the highest tax credit
- If you have your senior parents living with you, you can claim caregiver amounts for them, single taxpayers may be able to claim them as eligible dependents and some home renovations for seniors are tax deductible too!
All of the above is only possible if families file their taxes together, put together all the information and use it to their advantage. As all of this information might seem overwhelming and tax professionals like Softron Tax can help you file your taxes efficiently and accurately.
While there are huge benefits in filing taxes together, there can be negative consequences for not filing together. The GST credit, the Ontario Trillium Benefit and the Child Tax Benefit are all calculated on the basis of family net income. In order to accurately estimate these benefits, the returns should be prepared together. Any mistake in reporting family income may cause a loss of benefits and unnecessarily attract reassessments and audits by the Canada Revenue Agency
Let me share a real life example to put the theory in perspective. Brad and Christie are my clients for past few years. They used to come together every year and file their taxes until this year when Brad’s buddy at work filed his taxes at work and Christie came to my office alone. They missed taking advantage of the Family Tax Cut and Christie brought $1000 worth of donation receipts with her which I could not use as she did not have any taxable income. As Christie was also going to part time school, Brad’s buddy did not claim any spousal tuition tax credit on his return. They were set to lose about $3500 due to all this and it was tedious work to file for all the adjustments and get the taxes done right. Needless to say, it got highly stressful for Brad and Christie. It is therefore recommended that families should file their taxes together and professional advice should be sought to ensure that taxes are filed efficiently and accurately.
Let’s do it together, let’s do it right!!!