Communication is highly important with your spouse in all areas of your relationship. Now spending an evening doing your taxes together isn’t what you would call a romantic evening but it really is a necessity and it could help to introduce you each to a little bit about tax planning.
When you only had to do your tax filing as a single tax payer now doing it with a spouse makes the single filing look easy. Yet at the time it was still a hassle.
All too often people get so fed up with trying to figure out the best way to do their taxes they take as many short cuts as possible. This means they often lose out on incentives that could have been significant for them.
There are two types of tax breaks. One is through the non refundable tax credits, which can reduce your taxable income, and put you in a lower tax rate. Or there is refundable tax credit which might even put some money in your pocket if you can get to the tax return mode.
There are many different ways that your spouse’s income can affect your tax return and vice versa. Sometimes it can be in a positive way and then at times not so positive.
One of the biggest events currently is the income splitting. Seniors have been enjoying the tax savings this can create with their pension income splitting, now it is becoming available to families too.
What kind of decisions do you need to make as a couple? Well there are some instances where the higher earner has to make the claim. This shouldn’t be difficult to figure out as you have your tax information in front of you so you can do your tax filing.
Just by discussing these various tax entries that involve your spouse it can encourage you to talk about how you may be able to generate some savings, or affect your future planning.
For example, let’s assume that one of you wants to take on an extra job. You both have equal opportunities to do this. Take a look at your individual tax brackets and see who is going to get pushed into a higher one if they elect for the second job. This can make a difference to the tax you pay.
Unfortunately some couples do separate and it has been a habit in the past to let the spouse handle the tax returns. All the one spouse does is sign on the dotted line, for the return. When the couple parts their ways they need to know what their tax situation has been for the previous years, as often if there are lawyers involved they will ask for this.
To make tax life really simple, why not plan on visiting a quality accountant as a couple, and let this expert decide the best tax approach for you individually but will serve you well as partners.
