Joy shared is doubled, sorrow shared is halved. No truer is this proverb then in the case of marriage. While married couples can't exactly halve their tax liability, they can pay less then they otherwise would as two single individuals. Here are some tax saving and other financial ideas for Canadian couples.
Tax Benefits:
Spousal Tax Credit: Married couples can claim a spousal tax credit, which allows them to reduce their overall tax burden. Claim this amount if one spouse supported the other and their net income was less than the basic personal amount.
Pooled charitable donations: You can get a bigger charitable donation tax credit by pooling your donations for the year. This is because the portion of donations over $200 receive a larger credit.
Pooled medical expenses: This works similarly to charitable donations, except you want the partner with the lower income to claim all the medical expenses for the couple. This is because the tax credit for medical expenses is based on a percentage of your income - the larger your expenses are a percentage of your income, the larger the credit.
Income splitting: Retirement is probably not top of mind when most couples are thinking about marriage. But married couples can split their eligible pension income to lower the amount of tax they must pay by moving some income from a higher marginal tax bracket to a lower one.
Pension Benefits:
Spousal RRSP Contributions: Similar to pension income splitting, married couples can reduce their tax liability in retirement by directing their RRSP contributions to the spouse that is likely to have lower income in retirement.
Survivor Benefits: Many pension plans offer survivor benefits to spouses. In the event of one spouse's death, the surviving spouse may be entitled to receive a portion of the deceased spouse's pension benefits, providing financial security in times of loss.
Health and Insurance Benefits:
Health Insurance Coverage: Marriage often allows spouses to access each other's health insurance plans, potentially resulting in cost savings compared to individual coverage.
Insurance Discounts: Married couples may be eligible for discounts on various types of insurance policies, including auto and home insurance, by bundling their coverage under a single policy.
Estate Planning and Legal Benefits:
Spousal Inheritance Rights: Married spouses have certain automatic rights to inherit from each other's estates in the absence of a valid will. This ensures that surviving spouses are provided for financially, even if there is no explicit provision in a will.
Power of Attorney: Being married can simplify the process of appointing a spouse as a power of attorney for both financial and healthcare matters, streamlining decision-making processes in times of need.
In conclusion, marriage offers various financial benefits that can enhance Ontario couples' financial well-being and provide security for their future. From tax advantages to pension benefits and estate planning perks, tying the knot can have a positive impact on couples' financial situations. It's essential for couples to explore these benefits further and consider how they can leverage them to achieve their financial goals together.
*Disclaimer: The content provided in this blog post is for informational purposes only and should not be considered as financial advice. It is essential to consult with a qualified financial professional before making any financial decisions. We do not assume any responsibility for the accuracy or completeness of the information provided, and any reliance you place on such information is strictly at your own risk.
Comments