# Common Law VS Single Filing = loss?



## canucker12 (Apr 18, 2010)

Just finished filing, my GF and I have just recently filed under common law and both lost quite a large amount of money. 
I made roughly $53,000 and she made about $43,000. She spent most of that money on schooling to work in the medical industry, her return after her tax breaks for schooling was around $4,000, mine was about $2,000 (I spent less on school). 
Once we filed it as common law it took hers down to about $1,000 return and my return was about $400. 

Does this make sense? I'm having people tell me that the system is looking at us as one person making $90,000 instead of two individuals. Some people are telling me this isn't how its supposed to happen and that their friends have filed common law but havn't had as much taken off? Any input or ideas? I can't get a hold of anyone on a Sunday for clarification  Thanks any help would be appreciated


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## m3s (Apr 3, 2010)

A lot of benefits are based on family income so you may have lost some

If your GF made no income, you could claim her personal allowance. Since she made $43k it makes sense that common law doesn't help


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## OptsyEagle (Nov 29, 2009)

You really have to go into your return, line by line, and see what changed. Specifically take a close look at your schedule 1 for Federal tax. I would be just guessing to say what you did wrong but, "no" it does not make sense.


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## FrugalTrader (Oct 13, 2008)

I agree, just because you filed together should not have that sort of impact. I would review everything again.


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## jacobv (Apr 7, 2010)

You say that your wife spent the majority of her income to attend school. This should result in a carry forward amount for tuition, as she will have used up the maximum federal and provincial allowances for tuition for this year.

The numbers themselves do not seem particularly out of order. My experience is that generally, the addition of a spouse will result in a net reduction to a tax return of approximately $2000.

When you consider the fact that you had family income of almost $100,000, you're really not doing badly.

When you look at your t1 summary jacket, take a look at line 236 on both for net income, as well as line 260 for taxable income.

The spousal transfer amounts are what are getting you and there isn't a lot that you can do about it unless you have expenses that can be used to decrease your net income.

Remember that medical expenses when filing can be claimed by either spouse, and should be used to the benefit of the person with the highest taxable income.

Additionally, investment income can be split between the spouses, so you may consider splitting t5s if there are tax advantages there.

Because both of you have relatively high incomes compared to the majority, you probably aren't going to see a benefit from property taxes or rent, but check out the numbers on the ON 479 if you are claiming in ontario and have a tax program that will do the math quickly for you.


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## OhGreatGuru (May 24, 2009)

Do you have children? The only thing I can think of that would make that kind of difference (other than an error you have made somewhere) is if, as single parents, you were claiming a child as an Eligible Dependent under Line 305. This is one of the anomalies in the rules that does discriminate against couples. Line 305 gives a tax break for single parents by allowing them credit equivalent to that for a spouse ($10,200). But they lose it if they are married or common law.


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## canucker12 (Apr 18, 2010)

Great responses folks, I really appreciate them.

No kids, no medical expenses. We do have a mortgage. Both of us are in the medical field. I'm 26 and my girlfriend of 6 years is 27. I'm attending university this year but that doesn't help for this last tax season. Some people are saying that somethings not right.. it's pretty hard to screw these things up via netfile. I would think the only thing you could mess up would be some credits that we would miss... but we've claimed RRSP contributions and schooling credits. 
I wonder if it might be a good idea to go to H&R block and ask some questions?

Thanks again folks.


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## ghostryder (Apr 5, 2009)

OhGreatGuru said:


> This is one of the anomalies in the rules that does discriminate against couples. Line 305 gives a tax break for single parents by allowing them credit equivalent to that for a spouse ($10,200). But they lose it if they are married or common law.



I see no discrimination. Couples get to claim the spousal credit. Single parents get to claim the Amount for Eligible dependant. 


And the eligible dependant doesn't have to be a child. It can also be a parent, grandparent etc.


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## Jungle (Feb 17, 2010)

ghostryder said:


> I see no discrimination. Couples get to claim the spousal credit. Single parents get to claim the Amount for Eligible dependant.
> 
> 
> And the eligible dependant doesn't have to be a child. It can also be a parent, grandparent etc.


The couples spousal credit can only be applied if spouse income is under, $8,353, no?


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## OhGreatGuru (May 24, 2009)

Jungle said:


> The couples spousal credit can only be applied if spouse income is under, $8,353, no?


Yes, that's the problem - the spousal credit disappears if spouse is working even part time. And in OP's case both partners have taxable income.

To ghostryder - I know Line 305 includes other kinds of dependents - I selected what might apply in typical case of young common-law couples. But you raise another interesting anomaly - If a partner is supporting a dependent parent or grandparent, why should they lose that credit because they got married (common-law or otherwise)?


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## MoneyGal (Apr 24, 2009)

The spousal credit is eroded if the spouse has any taxable income, not just if he or she is working. The UCCB, for example, decreases the available spousal credit.


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