Once a couple is separated, there occurs a variation in your tax payment. That’s why we are here with the tax tips for separated couples in Canada. So you can act accordingly and know what to do and how to tackle these situations or contact a professional lawyer to get the best advice.
Knowing these tips before will act as a helping hand and will save you from various complicated situations. Hence, for your benefit, continue reading to know about how to file taxes when separated from Canada, along with various crucial things about the tax system in Canada.
Tax Tips for Separated Couples In Canada
If this is the 1st tax season of your payment after getting separated in Canada, you must know some tax tips before making sure you are doing the right thing.
Let me walk you around with these essential things:
If you both are legally divorced after December 31, you will be considered married and thus have to file your income tax return based on that. Once your divorce is confirmed, you can file for a tax return as a divorce.
When the status changes, notify the Canadian Revenue Agency (CRA) by calling or changing the status from their website. After then they will confirm everything to see if you are eligible or not. If yes, you can pay tax separately from now on.
If you pay legal payments to collect child or spousal maintenance, you can claim those on your tax return. Not only that, but you can also claim the fees that come with collecting late support or efforts to increase the payment.
But the payments you made to the lawyer for preparing the separation/divorce/child support agreement are not tax-deductible.
If you get any financial aid from your ex-partner (child/ spousal maintenance), you must claim it on your tax return. In the case of spousal support, claim it as taxable income while child support is non-taxable.
Can I Claim Single If I’m Separated?
If both of you are separated, signed a separation agreement mutually, and live in 2 different houses, it will still mean that you are legally married. As a result, you will be a couple by the IRS standards and thus need to pay taxes jointly.
So, to be more precise, until you are legally separate from each other, based on the IRS protocols:
- You can only select “Married Filing Jointly” or “Married Filing Separately” status.
- Cannot file as “Single Status” or “Head Of Household.”
Instead, you can claim the single status only if you are legally separated. Meaning, if you get a decree of separation maintenance before December 31, you can claim for the single status.
Otherwise, the law will take you as a married person for the whole year. Hence, the timing also plays a vital role in paying the tax as a single or married person.
Luckily, there is an exception to this date issue, stating:
If your spouse is not a household member for the past 6 months of the tax year and doesn’t fulfil any additional requirements, the IRS will take you as unmarried. And you may file as “Head Of Household” status.
As a result, if the IRS thinks you are eligible, you may be given the status even if you are not legally separated or have a divorce decree passed by December 31.
How Do You File Taxes If You are Separated In Canada?
Filing your taxes during a separation or divorce can be complicated if you don’t know the exact rules with your current marital status based on the IRS perspective. Many of us even don’t know the current status and thus make mistakes in filing taxes.
So, first, know whether you are legally married, separated or divorced. After then, we can decide on how you can file taxes. Understanding the legal status is vital to know what are your current financial obligations now.
Hence, if you plan to file taxes separately, you must be eligible for the “Head Of the Household” status:
- Both of you are not been a part of each other lives for more than 6 months (consecutively)
- Only you take of the expenses or have paid much more
- Your house was the main home for over 6 months to your own, step and foster children
Hence, if you pass the above-eligibility criteria, then only you can pay separately in Canada. Otherwise, you need to pay jointly.
What Should You Not Do During Separation?
Is there any couple who doesn’t quarrel? Well, it is something that is 100% impossible, Right!!!
But if it is at the peak of breaking things up and both of you are determined to get separated, then there are some things that you must take of them. Otherwise, you will find yourself quarrelling more than ever, putting you both in a more problematic and stressful situation.
Like the famous proverb goes by, “First things come first.” So, if you don’t want yourself in meddling with these situations, take a look at the things you must not do during your separation:
Don’t Rush Into Things: If You Have Children
If you are both a child, then remember everything should be handle with much care. Or else, the children will be affected by seeing the disturbance between their parents, which as a parent you will never want.
And to be honest, in the worst scenario, these things can have a great negative impact on that child’s entire life. In fact, in many cases, the child blames themselves and thinks their parents are getting separation due to their fault.
Now the question arises, what to do in this situation?
The best is not to move out of the house out of rage. Instead, keep calm and take your time. Try to talk with your spouse about how to handle things so that the children are not affected. Because you know these answers more than anyone about which things will be better for your children.
However, if you think that staying together is not happening and one of you takes the child, never deprive your partner of meeting the children (if not harmful). The child loves both of them equally, so in that sense, you will be hurting your child if we don’t let the child meet their father or mother.
If your children are an adult (18 or more), you can always talk with them to know what they want. As a result, you can know their viewpoint and make them understand your situation, which will balance things between you two. Therefore, you can make the right decision which will be beneficial for all.
Don’t Haste Into A New Relationship
It is always a smarter decision to take some time to heal the pain you have received from your past relationship. In this way, it will build your mind and will make you stronger than ever.
Moreover, if the new relationship also doesn’t work out, it will affect you more. That’s why the best is to take some time and let yourself heal completely before rushing into a new one.
After all, we all are human beings with lots of emotions at the end of the day. And if you have children, it will be a huge shock for them to see you with a new person right after separating.
In fact, many judges also advise not to jump into a new relationship if you have children as it may affect the child mentally. Remember, taking time doesn’t mean you shouldn’t go in a relationship. Instead, it is a period to take things slowly to recover from your heals and become stronger.
Don’t Public The Separation
Until your separation’s legal proceedings are complete, don’t share such things on your social media account. Instead, just informing friends and families is enough. Otherwise, every post of yours will need a justified explanation in court.
Don’t Badmouth Your Ex-Partner
Never talk bad about your ex-partner, especially when you are with your children. Never think of it as a chance to gain the children’s trust by backbiting their mother or father. In this way, they will feel stress and upset.
So if you love your kids, even by mistake, don’t badmouth your ex-partner. Instead, talk with the children and assure them everything will be fine. As a result, you will become high in their eyes, and the whole separation will not affect them anyway.
Don’t End with A Bad Note
Always try to end things with a happy note. Remember, all separation is hard to deal with, but many things will become easy and stress-free if both of you can keep on good terms.
Try to respect each other as once this person was a special one who you loved wholeheartedly. Moreover, ending things in a good way will give peace of time.
Single-status people have a different method of tax payment than married-status people. And if you file jointly pay even after getting a legal divorce decree, you will be confronted by the IRS.
Therefore, to avoid facing any complications in the future, you must have a complete idea about the tax tips for separated couples in Canada. As a result, you will know what things you must do, whether you are eligible or not, the next step and how to handle the situation.