# Tax Question and how to file when spouse has low income`



## Westerncanada (Nov 11, 2013)

HI CMF. 

I have a question.. my now fiance and I have lived together for a year and are expecting our first child in December. My question is she has not worked much at all this year (Under $5000) and wondering how we should file taxes to best maximize our tax situation? 

I understand we cannot split incomes ( I am currently in the $130-$150K mark) and I know we do have to file as common law as we will have a child together before the end of the tax year. 

Does anyone have any recommendations? I am concerned that when she files with me this year that she wont get any benefits due to my income level (IE Child Tax benefit).

Any suggestions would be appreciated.


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## jerryhung (Mar 28, 2011)

There is no "legal" way to cheat the system
It is what it is, unless you don't declare common-law

Just report yours, hers, link them, and pay the final. Her <$5K income shouldn't change things much...you can try some tax calculator


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## leoc2 (Dec 28, 2010)

You may want to consider opening an investment account for her only (not joint). She then places every penny she earns into it each year. You pay for all living expenses. After several years the investment account earnings grow and are taxed at her low marginal rate. Unfortunately, this is not the immediate tax solution you are looking for but this approach pays off many years down the road.


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## Westerncanada (Nov 11, 2013)

leoc2 said:


> You may want to consider opening an investment account for her only (not joint). She then places every penny she earns into it each year. You pay for all living expenses. After several years the investment account earnings grow and are taxed at her low marginal rate. Unfortunately, this is not the immediate tax solution you are looking for but this approach pays off many years down the road.


Thank You both for your replies. We are certainly not intending to cheat the system, just not sure what the best way to file is. 

As i understand the law, we have to claim common law after living together for 1 year or on the first day we both live together after the birth of our child. 

So if baby comes in December then we would have to joint file for 2015 but if baby is late and comes in January we would not file as common law for 2015 and she should receive full benefits for the 2016 year if im not mistaken.

Thanks again


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## Market Lost (Jul 27, 2016)

Westerncanada said:


> Thank You both for your replies. We are certainly not intending to cheat the system, just not sure what the best way to file is.
> 
> As i understand the law, we have to claim common law after living together for 1 year or on the first day we both live together after the birth of our child.
> 
> ...


Didn't your first post indicate you've already lived together for a year?


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## OhGreatGuru (May 24, 2009)

_As I understand the law, we have to claim common law after living together for 1 year or on the first day we both live together after the birth of our child. _

You are mistaken in your understanding. The "or" doesn't mean you get to defer declaring common law status as long as you want, until a baby is born.

As Market Lost points out, if you have been living together for 12 months, you are considered common law spouses by CRA, regardless of when the baby is due. You are required to file returns as married/common law. There is actually no "joint filing" in Canada as there is in the USA. You still have to file individual returns, but report your marital status and your spouse's net income on each other's returns. If your spouse made only $5K, you will benefit from a partial spousal credit; and some other benefits depend on your combined incomes.


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