We all know that tax is a very personal affair, and when it comes tax time we usually like to go off by ourselves and get on with the task at hand. We are focusing on what works best concerning our tax situation, but we might be forgetting that what is happening with our spouse’s tax situation can have a direct effect on ours, and vice versa.
If you really aren’t tax savvy then chances are you just do the minimum amount of work necessary on your tax returns to keep you in good standing with the tax department. To start with it is a good idea for you and your spouse to tackle your tax obligations together. Don’t just assume who should take the tax benefits.
First it is important to realize that being married or being in a common-law relationship can affect your tax rate, and at the same time may make you eligible for some additional tax benefits.
There are important things to consider such as the spousal amounts and which tax items can be transferred from one spouse to another to give you the most benefit.
You really want to focus on being able to keep yourself in the lowest tax bracket as possible. All too often when couples work on their taxes separately they sometimes find that they can’t use all of their non refundable credits so they just forget about them. Yet, it may be that the balance of the unused amount could be transferred to the spouse to use. While there are only specific credits that can be transferred it is still work knowing what these are. These will be non-refundable credits like the age amount, the amount for eligible children, pension and/or disability as well as tuition and education expenses.
It is really worth the effort to take a close look at the tax situation of both parties. While each credit may seem small on its own they can add up and make a significant difference to the bottom line of tax owed or towards a refund.
In some cases you can add some of the non-refundable tax credits together that are applicable for both you and your spouse then use them on the tax return that would most benefit from them.
This type of tax approach does take some work, but it can be well worth it. If you are making the wise choice of using an accountant for your tax filings then make the decision to use the same expert to complete both you and your spouse’s tax returns. An experienced accountant will know the best approach to take for the tax returns to get you both in the best tax position based on your joint circumstances.
For other ways to get ahead of your tax situation be sure to sign up for our FREE E-book, Taking Control of Your Taxes 2015.
