Tax Tips & Pits – Bedrooms and taxes: Marital status made difficult

You may think that no one is interested in your relationship, but the taxman is.

It’s Valentine’s Day and you may be thinking no one is interested in your relationship … or lack of. Not so, the taxman is. Close your curtains!

As government benefits and tax credits expand and new ones are added, the more Canada Revenue Agency (CRA) is insisting you report your marital status using CRA definitions.

If you claim it incorrectly, you may be losing out on some benefit or credit. Or, you may be gaining right now but will be asked to pay the government back if one day your status is corrected.

CRA’s rules surrounding marital status are unmistakably defined, and at the risk of creating confusion, here is an abridged version.

The options for reporting your status include married, common law, divorced, separated, widowed, and single.

Married: Defined as the legal union of a couple, referred to as spouses.

Divorced: Defined as the legal break-up of a married couple. You report this status until you enter another relationship – once divorced you are not single by CRA definition.

Widowed: Having been married but having lost your spouse. You report this status until you enter another relationship – again, you are not single.

Common-law: Defined as living together in a conjugal relationship for 12 continuous months, referred to as partners. However, having or adopting a child or becoming a custodial parent to your partner’s child, the 12 month rule no longer applies.

Separated: Whether married or common-law, a period of 90 days must pass before this status can be reported. This means a married or common-law relationship that breaks down after October 1 in a given year, on December 31 of that year that relationship is still considered married or common-law for tax purposes because the 90 day separation rule will not be met until into the New Year.

In the case of establishing the status of a new common-law relationship, if temporary separation(s) of fewer than 90 days occur(s) within the 12 month continuous period, the 12 month timeframe is not lengthened by the days of separation, nor is the 12 month period restarted. So technically, a couple could live an “on-again-off-again relationship” over the course of 12 months whereby they may actually have lived apart more than together but still find themselves classified as common-law for tax purposes.

Single: As the adage goes, you’re only single once. Once married and if that relationship is no more, the claim is either separated, divorced or widowed. Similarly for common-law, if it’s no more, the claim is either separated or widowed. This is your status until you enter another relationship. In other words, you aren’t to revert back to single as your status with CRA.

And what should one do if one’s marital status changes? CRA tells us that we must report the change by the end of the month following the change (use form RC65) … I would suggest you certainly change it on your next tax return.

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.

Just Posted

Pedestrian killed on Highway 22 Saturday evening

Police say 51-year-old man died after being hit by car

UPDATE: DriveBC says highway re-opened after accident

Highway 22 closed for seven hours on Saturday

Forestry workers set to begin job action in Kootenays

Operations in Castlegar, Cranbrook, Galloway, Elko, Radium, Golden may see job action this week.

Métis Flag flies in Trail on Louis Riel Day

Area students, officials and public attend flag raising at Trail City Hall

Early Trail borrowed a couple of names from the U.S.

Place Names: Connection between Trail and Butte, Montana

Saving salmon: B.C. business man believes hatcheries can help bring back the fish

Tony Allard worked with a central coast First Nation to enhance salmon stocks

High-end B.C. house prices dropping, but no relief at lower levels

But experts say home ownership remains out of reach for many for middle- and lower-income families

Worker killed in collision at B.C. coal mine

Vehicle collision occurred at approximately 10:45 a.m. this morning

B.C. asking for tips on ‘dirty money’ in horse racing, real estate, luxury cars

Action follows a Peter German report on money laundering in B.C. casinos

Canadian dead more than a week after plane crash in Guyana: Global Affairs

Global Affairs said it couldn’t provide further details on the identity of the Canadian citizen

Children between 6 and 9 eligible for $1,200 RESP grant from province

BC Ministry of Education is reminding residents to apply before the deadline

Victoria spent $30,000 to remove John A. Macdonald statue

Contentious decision sparked controversy, apology from mayor

Privacy concerns over credit card use for legal online pot purchases

Worries follow privacy breaches at some Canadian cannabis retailers

NEB approves operating pressure increase to repaired Enbridge pipeline

The pipeline burst outside of Prince George on Oct. 9, now operating at 85 per cent

Most Read