Results of Marriage - Income Tax Benefits and Marital RightsTaken from: http://www.hrblock.ca/your_life/getting_married.asp
Marriage Income Tax Benefits [Canada-only]
For Better or For WorseGetting married or starting a common-law relationship can result in a number of income tax consequences - some advantageous, some not. It's a good idea to take these tax consequences into consideration when planning your future together.
Spouses and Common-Law PartnersThe Income Tax Act treats spouses and common-law partners the same way. However, it is important to understand what the terms mean. A "spouse" is someone to whom you are legally married. The definition of a "common-law partner", on the other hand, depends on whether or not you have children:
If you start cohabitating with someone who is the parent of your child, you are considered to be common-law partners from the time you move in together. A "parent", for this purpose, includes an adoptive parent (whether in law or in fact) as well as a natural parent.
If there are no children involved, you only become common-law partners after you have lived together in a conjugal relationship for 12 continuous months. The 12-month period includes any period during which you were separated for less than 90 days because of a breakdown in your relationship.
ChildrenIf you already have children, it will not normally be to your advantage tax-wise to get married or start living common-law. This is because you will no longer be entitled to claim the amount for an eligible dependant for one of your children once you are married or living common-law for an entire year. You may also see a reduction in your child tax benefit since the income of your spouse or common-law partner will now be taken into consideration in determining how much you are entitled to.
If you incur child care expenses, you should also be aware that they can only be claimed by the spouse or common-law partner with the lower net income. If one of you does not have any income, this will effectively nullify your claim. However, you will be entitled to claim the spouse or common-law partner amount if the income of your spouse or common-law partner is less than $9,600.
GST/HST CreditThe GST/HST credit is also based on family net income as opposed to individual net income. This means that if you're currently entitled to the GST/HST credit, you may see a reduction once you get married or start living common-law. Two people living separately can each earn up to approximately $32,000 and qualify for the full credit. However, if they were to get married or start living common-law, their credit would be eliminated.
Similar considerations apply to provincial tax credit programs, such as those offered by Ontario, Manitoba, British Columbia and Québec.
Registered Retired Savings Plans (RRSPs)Fortunately, there are some tax advantages to getting married or living common-law. In particular, you will now be able to set up spousal RRSPs. This allows for substantial income-splitting opportunities if you and your spouse or common-law partner are taxed at different marginal rates.
It will also make things easier if one of you dies. If you die without a surviving spouse or a financially dependant child, the Fair Market Value (FMV) of your RRSPs or RRIFs are included in income on your final return. If the plan is substantial, this will mean that part or all of it will end up being taxed at your highest marginal rate. However, if you are married or living common-law, the plan can be transferred to the survivor without tax consequences.
Family AssetsIf you give a capital property (for example, shares or mutual funds) to a non-related individual, you are deemed to have disposed of it for proceeds equal to its Fair Market Value (FMV). This will result in either a capital gain or loss on your tax return, depending on whether the FMV is greater or less than its cost to you. However, you may transfer assets to your spouse or common-law partner at their cost (unless you elect otherwise), with the result that any accrued gain is deferred until such time as the property is actually sold.
Unfortunately, you will also become subject to the attribution rules. This means that you will have to continue reporting the income from the transferred property even though you no longer own it. So you cannot split your income simply by transferring assets to your spouse or common-law partner. For this reason, most financial planners advise the lower-income spouse or common-law partner to make income-producing investments that are subject to income tax, while the income partner pays for the mortgage and household expenses.
You will also become subject to the rule allowing for only one property per family unit to be designated as a principal residence. Capital gains you realize on any other real estate you own will be subject to income tax. This means that if one of you owns a home while the other owns a cottage, you will have to decide which one would be best covered by the principal residence exemption.
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Taken from: http://www.essortment.com/home/taxfilingstatu_senp.htm
Tax information: how a new marriage can affect your tax filing [American]
Once a couple has walked down the aisle and tied the knot, many obvious changes may take place in their lives, such as, change of residence, shared living space and shared decision - making. The new husband and wife will also need to look at changes that will affect their tax filing. Newly married couples should be diligent to ensure that the names that they will enter on their tax returns match the name and Social Security Number on file with the Social Security Administration. If the wife is taking the husband's surname, she should obtain and file form SS-5 to indicate the change in her name. Form SS-5 can be obtained from and filed at the local SSA office, online or by phone. A mismatch between the name and Social Security number will cause an e-filed return to be rejected and may also increase tax liability.
Marital status is determined on the last day of the tax year. For example, a couple who is married at 6:00 PM December 31, 2004 is considered married for the entire tax year and will be required to file taxes as married persons. This and all other rules which apply to married couples apply also in Common Law Marriages. It is not necessary for a couple to have been together for a certain amount of time to be considered married; they must be currently residing in a state that recognizes Common Law marriages or had been living in such a state when the Common Law marriage began. (The states which recognize Common Law Marriages are, Alabama, District of Columbia, Iowa, Kansas, Montana, Oklahoma, Rhode Island, South Carolina, Texas and Utah.)
The most important change that takes place with a new marriage is the filing status. The Internal Revenue Service (IRS) provides five filing statuses: single, married filing jointly, married filing separately, head of household and qualifying widow. When an accountant or an individual preparing his or her own taxes must decide the filing status, the first step will be to determine the marital status. Whichever filing status a tax-payer uses will affect their tax liability. Newly married couples can file one of two ways: married, filing jointly or married, filing separately.
Generally, when couples file a joint return, their tax liability is lower, which means they will owe a reduced federal tax. Tax rates are usually higher when couples choose to file separately which will increase the overall tax liability that the couple owes. When a joint return is filed, the income, exemptions and deductions of both spouses are entered on the return. For instance, if a husband has a dependent parent or child, that parent or child is included on the joint return along with the accompanying exemption dollar amount; the dollar amount for dependent exemptions in Tax Year 2003 was $3050. Spouses filing jointly must also use the same accounting period, either calendar year or fiscal year. Even if one spouse has no income, they may still file a joint return and benefit from the higher standard deduction. The standard deduction is an amount of income that the government allows that is not subject to tax. For Tax Year 2003 the Standard Deduction for individuals filing jointly was $9,500 for a couple under the age of 65.
Each person filing a return can claim their own personal exemption, unless they are being claimed as another's dependent. A spouse may only claim the personal exemption of the other spouse if the other spouse has no gross income is not filing a return and cannot be claimed as a dependent of another individual. An exemption is a dollar amount allowed by the government as a reduction of income. One spouse is never considered the dependent of the other spouse. Indeed, on a joint return, the couple not only benefits from the higher standard deduction, but is also jointly liable for any penalties or fines resulting from one spouse's under reporting of income or overstating a credit or deduction. If a husband or wife discovers that their spouse has included erroneous information on the return and, a fine or penalty is jointly imposed, he or she may apply for Innocent Spouse Relief which may enable him or her to avoid being penalized. The IRS will decide it is inequitable to hold the applying spouse liable. (The "innocent" spouse would file Form 8857.)
For couples who chose to file separately, the standard deduction for Tax Year 2003 was $4,750, for an individual under the age of 65. When spouses are filing separately and one spouse itemizes deductions the other spouse has a Standard deduction of $0. In Community Property states income received for labor or work performed is considered to be shared equally by the couple regardless of which spouse earned it. When filing separate returns, each spouse must make his or herself aware of the special rules which govern such income. IRS Publication 555 has comprehensive information concerning community income. (Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.) Couples sometimes choose to file separately if they desire that each will be responsible for their own finances. However, many credits and deductions are disallowed from married individuals who file separately.
Those filing separately are penalized as follows: They cannot deduct interest paid on qualified Student Loans; they cannot take the credit for Child and Dependent Care expenses; they cannot take the Earned Income Credit; they cannot exclude income received from qualified U.S. Savings Bonds that has been used to pay Higher Education costs; they cannot take certain education credits, such as the Lifetime Learning or the Hope Credit; they are usually disallowed the Adoption Credit; there are limitations on the Child Tax Credit and on Itemized deductions. These exclusions further increase the tax liability. Infrequently, a couple may find that filing separate returns may result in a decreased liability but the effort to file separate returns is not often worth the small amount of additional refund received. However, if a couple lives in a state where the state tax requirements are less restrictive than the federal guidelines, the higher state return will offset the higher liability imposed by the IRS.
Newly married individuals will also have to view and treat differently tax implications that will take hold during their retirement years, such as Social Security and Pension plans. One of the most popular instruments used in planning for retirement is the IRA or Individual Retirement Arrangement. The amount of money that an individual may contribute to an IRA in a given tax year and the amount of the allowed deduction will be determined by the compensation received by his or her spouse and whether or not that spouse is participating in an Employer sponsored pension plan such as a 401K plan. These differences in amounts apply to couples filing jointly. As per usual, couples filing separately are penalized in these areas; the amount of money that can be rolled-over from a traditional IRA to a Roth IRA is limited. Additionally, when considering Social Security benefits, a married filing separately status will result in an increased amount of the received benefits to be taxed. An infrequently applied credit, "The Credit for the Elderly and Disabled" is given to individuals who are 65 years of age or older and are permanently and totally disabled by the end of the tax year. Couples must file a joint return to receive this credit.
Newly married individuals may need to file a new Form W-4 with their individual employers. Form W-4 includes a personal allowance worksheet so that the tax payer can calculate the proper amount of withholdings to be deducted from his or her gross pay on a weekly basis. An accurate calculation will usually ensure that tax liabilities are met during the Tax year and no further tax will be owed at year end. In marriages where both spouses are wage earners, it is usually most beneficial when the total amount of allowances is deducted from the spouse with the higher salary. The other spouse will then claim zero allowances to help reduce overall tax liability. For two wage earners filing separately no change to withholdings need be made except to reduce individual liability.
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Taken from: http://www.mapleleafweb.com/features/same-sex-marriage-canada
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New Definition of Marriage The Civil Marriage Act extends the definition of marriage to include same-sex couples. The legal definition of marriage under the Act is as follows:
“Marriage, for civil purposes, is the lawful union of two persons to the exclusion of all others.”
In addition to expanding the definition of marriage, the Act also extends full legal benefits and obligations of marriage to same-sex couples; under this legislation, they receive equal treatment to that received by married heterosexual couples under Canada’s business corporation and cooperatives laws, and in regard to veterans’ benefits, divorce, and income taxes.
Purpose of the Civil Marriage ActThe Civil Marriage Act makes several statements concerning the purpose of the change in the definition of marriage:
• The Act recognizes that many provincial courts have found that equality rights, under Section 15 of the Charter of Rights and Freedoms, include the right to marriage without discrimination based on sexuality. Accordingly, the Act recognizes that same-sex couples should have the same access to marriage as opposite-sex couples.
• The Act states that only equal access to marriage, for civil purposes, would respect the equality rights of same-sex couples. Civil union, as an institution other than marriage, would not offer same-sex couples equal access and would violate their human dignity.
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Taken from: http://en.wikipedia.org/wiki/Same-sex_marriage_in_Canada#Other_same-sex_partner_benefits_in_Canada
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Other kinds of partnershipAs mentioned above, Canadian cohabiting same-sex couples are entitled to many of the same legal and financial benefits as married opposite-sex couples. In 1999, after the court case M. v. H., the Supreme Court of Canada declared that same-sex partners must also be extended the rights and benefits of common-law relationships.
The province of Quebec also offers civil unions to same-sex partners. Nova Scotia's Domestic partnerships offer similar benefits. Legislative changes in 2001-2004 extended the benefits of common-law relationships in Manitoba to same-sex couples as well as those of different sex.
In 2003, Alberta passed a law recognizing Adult Interdependent Relationships. These relationships provide specific financial benefits to interdependent adults, including blood relations.
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Taken from: http://community.livejournal.com/little_details/1919889.html
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One thing to note is that Ontario recognises common-law marriage (if you have a child together, or if you've been living together three years) and other cohabitation agreements/contracts, so most benefits don't in fact require marriage. Some small perks, however, are the fact that the spouse who makes more money can claim a spousal amount on their taxes, and can claim a deduction for contributing to their spouse's RRSP. Besides that, there's right of inheritance, right to a spouse's pension, inclusion in car insurance policies, right to claim compensation from a workplace or government if a spouse is killed under certain circumstances, right to have custody of non-biological children if a spouse dies and the biological parent isn't in the picture, and the ability to sponsor a spouse for immigration.
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First and foremost for people in my circle of friends was immigration -- family-class immigration is infinitely easier than the more ordinary kind, and unless they've committed some atrocious crime in their home country all you have to do to sponsor a spouse is provide proof that you can support them if they can't work.
(About a year before same-sex marriage came through in Ontario in 2003, Immigration Canada announced that same-sex common-law couples would be accepted as "family" for family-class immigration. Canada ruled that same-sex common-law marriages were legal in 1997. Problem: to be considered common-law, you had to live together for a year, which was impossible for most bi-national couples.)
There are dozens of other benefits -- deduction transferal, inheritance rights, joint adoption, right to decide things like medical attention if incapacitated, and burial rights in event of a death. These things are important -- from the days before legal marriage, I've heard of cases where the estranged family swoops in in the case of illness and death, and takes over as if the partner didn't exist.
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