Separation from your spouse is never easy, especially when you have been in a common-law marriage. Among several things, taxes are one very crucial thing to consider.
Everyone has a common question: how do I do my taxes after separation from a common-law marriage. The common law separation in Alberta follows strict rules and regulations. Therefore, you must know your law and order after you and your spouse have decided to separate from one another.
Here is a brief idea about the things you should do regarding taxes after being separated from your common-law partner.
Common-Law Marriage and Separation
A common law marriage is different than regular legal marriages. You and your spouse need to fill out certain criteria to be eligible for that. Similarly, common law separation is also determined after certain conditions are fulfilled.
Firstly, you need to live together for 12 months at a go with your partner to be considered as common law partners. This 12 months or 1-year time span must be complied to living together like romantic and physical partners. It cannot be two people living together like roommates. This involves being romantically and physically intimate, sharing a roof together, sharing expenses and utilities, and maybe having a child whom you are bringing up together.
When it comes to separation, you must again fulfill certain conditions. You and your common law partner must be separated from each other for a consecutive 90 days. This is the only way you can claim a separate status from a common law relationship.
Informing the Canada Revenue Agency (CRA)
The CRA will determine you and your spouse to be separated from a common-law marriage only when you have lived apart for 90 days straight. This is extremely important as the CRA will determine your taxes and any benefits due to the common law marriage separation.
You may be entitled to some cuts on your taxes due to the separation. The CRA will ensure that you do not enjoy any unethical and illegal advantage. As a result, it is crucial that the CRA is informed about the separation of common law marriage.
Once the CRA is confirmed, it will calculate the taxes on the basis of the new marital status. The CRA will file your tax return as “divorced” for the year you have gotten separated from your partner. You can call or notify CRA through email.
How to Do Your Taxes After Separation from Common Law Marriage
Nobody likes to know and think about separation when they are involved with someone they love. However, it is always beneficial to have enough ideas so that you do not end up feeling lost when the time comes.
Your first task is to notify the CRA that you have been separated from your common law partner for at least 90 days. This 90-day condition must be fulfilled by being actually separated as no on and off thing will be considered.
You will need to fill out the RC65 Marital Status Change form. As mentioned already, you can fax or email the form to CRA.
Claiming Dependent Tax Credit
You and your common law partner may have children together. In situations like this, you can claim a dependent tax credit.
The dependent tax credit will come to you only when you have sole custody of the child. This can benefit you greatly from the separation. On the other hand, shared custody will make the calculation complex. In the circumstances like this, you may have to determine whether you or the other parent gets the credit.
In the case of child support, there is no tax involved. However, spousal support is fully taxable. The common-law relationship works similarly to a legal divorce here. Whoever receives the spousal support will be obligated to pay taxes.
If you are paying spousal support, you can reduce the amount from your income. As a result, this may reduce your overall tax payable amount.
Divorce or separation is one of the hardest things to go through as a couple. There are numerous complications involved in the process. Among them, the taxpaying system and order are extremely important and complex, especially when you are separated from a common-law marriage.
However, from this article, you can clearly understand what to do when you are separated from your common-law partner. Also, you can hire professional assistance for better quality and efficiency.