Would Two Students Be Entitled to More of a Tax Break if They Got Married?
July 26, 2010 | In: Uncategorized
Me and my girlfriend just started university. We are at separate schools but have tossed around the idea of getting married on paper to increase our tax and insurance breaks. My question is would this arrangement typically increase our entitlement? Shes paying for university with her parents money and I’m paying for it with loans. Shes 19 and I’m 18 and she lives in Quebec and I live in Ontario. Don’t worry about our romantic situation when you answer this question, please!
5 answers
daniellejaramillo@ymail.com
July 26th, 2010 at 9:31 pm
Don’t get married for tax breaks lol
Alan F
July 26th, 2010 at 10:00 pm
your income is too little anyway, wouldn’t make a big of a difference
T E
July 26th, 2010 at 10:12 pm
Here is a discussion similar to your question.
Quoted figures are based on 2007 taxation regulations.
Personal Amount
Each person can claim $1,384 as a basic amount against the tax payable. The amount can be claimed for a spouse provided (s)he has a maximum net income of $8,929. No direct equivalent exists for roommates, even if one of the roommates is not working.
Advantage: Marriage / Common-Law
Eligible Dependent
Roommates can claim a parent or grandparent as a dependent, whether by blood or though marriage / common-law / adoption. Of course, the dependent must be either disabled or underage. The value of the claim is reduced when the dependent’s income reaches $5,702 and eliminated outright at $9,721. Married and common-law couples are prohibited from making spousal claims, while other dependents can be claimed only if the spouse was not in the house and not providing/receiving support from the claimant. Only one claim per household can be made, even if there are multiple dependents.
Advantage: Roommates
GST / HST Credit
Married and common-law couples are only permitted to submit one GST/HST application per household. To receive the credit, the submitter must include his/her spouse’s net income (even it if is zero) and SIN to receive the credit. If you separate from your spouse, you can receive a separate GST/HST credit, provided you are apart for at least 90 consecutive day. A couple living as roommates can each apply for the GST/HST Credit.
Advantage: Roommates
School / Tuition / Schoolbooks
If you do not have enough income to use your own credits, you can either carry those credits forward to a future year or transfer them to your spouse. You cannot transfer credits to your spouse once they have been carried forward. School-related credits can be transferred to a parent, but unfortunately not a room-mate.
Advantage: Marriage / Common-Law
RRSP
RRSP’s are the most population tax shield and thus deserve mention. Anyone with an earned income can contribute to an RRSP, up to the age of 71. The approximate RRSP claim limit is 18% of the previous years income less pension adjustments, profit sharing plan adjustments and past service adjustments. Limitations may be increased by past service adjustment reversals and unused deductions carried forward. Spousal RRSP contributions can also be made, subject to the same limitations. Roommates obviously don’t have the advantage of making spousal contributions, but real bias may be in what constitutes earned income. Stay-at-home parents do not qualify to make RRSP contributions, which has caused some controversy.
Advantage: Marriage / Common-Law
http://www.cynicsunlimited.com/2007/09/23/does-canadian-taxation-discriminate-against-marriage/
Sparky
July 26th, 2010 at 10:18 pm
Students normally do not have a great amount of taxable income. Any credits that would normally be used by a married couple would only be applicable if one of the partners in the marriage has an income over $9600, and the other has an income below that point.
Keep in mind that even if you do not live together, you would only be eligible for one GSTC cheque for the family, and the combined family amount does not always equal the combined individual amount. If there are any children involved, the CCTB amounts start to get clawed back once the family’s net income reaches about 21,100 dollars, and this level does not change in marriage, but there would be two incomes added together.
To answer your question… there is rarely an advantage to getting married when it comes to income taxes.
abigreturndotcom
July 26th, 2010 at 11:03 pm
Don’t worry about our romantic situation when you answer this question, please! Ah dude that is the most important thing to consider. It is very hard to get out of a marriage. This is not something you want to enter for tax reasons. (God for any reason to get married this is probally the worst one!)
Really unless you are making huge cash and she is not making anything there isn’t a reason for tax purposes.
For the insurance part, if she is going to school her parents coverage should continue.
Really dude, GET MARRIED FOR THE RIGHT REASONS AND ONLY IF YOU THINK YOU WILL BOTH WANT TO BE TOGETHER FOR THE REST OF YOUR LIVES!!!!!!!