Tax Things to Keep in Mind While Newly Divorced in Canada
Divorce in Canada is an optimal arrangement for some former married people’s physical and mental well-being. However, aside from having those parts of your life impacted, you will also experience some financial changes. Compared to taxes where everything is filed in conjunction with a former partner, there will be several differences to keep in mind.
It’s important to follow the rules regarding tax filing after the end of a marriage. If you’re having some difficulty in doing so or you require help with understanding the process better, it’s best to seek out a tax professional that can help you out.
Here are a few things to keep in mind when filing your taxes as someone who is newly divorced.
1) Income Tax Filing
How much you’ll need to pay for income tax will depend on several factors, including your age and the number of dependents you’re claiming. If you have children, then you’ll have to include them as dependents on your tax return.
Remember that you and your old spouses have to file taxes as separate individuals. It may be best to iron out the terms with your former loved one, especially if you separate with them after December 31st in Canada.
2) Status on the Tax Return
If you’re in a common-law or civil union relationship, the same rules apply to you as well. However, upon filing for divorce, you’re going to have to change the marital status on your tax returns to either “separated” or “divorced.”
There are several unique situations, especially when you’re eyeing to get tax deductions on your returns. Getting the professional opinion of a tax professional can help you out in setting the right marital status and claiming the applicable deductions.
3) Divorce Legal Fees
The legal fees that are paid for the divorce settlement are not deductible but still need to be covered, so it’s encouraged to get your receipts in order and figure out how to be financially healthy while shouldering these expenses. Be sure to discuss your personal matters and financial standing to attain professional tax advice.
4) Child Support Payments
Child support payments are the money paid from one parent to another for the expenses of raising their child. It’s typically non-taxable, but it’s still imperative that you receive professional help for a thorough understanding of these processes. It can also be helpful to look into community support if you’re struggling to feel secure about your financial situation.
5) Spousal Support Payments
Spousal support payments are the amounts paid from one spouse to another to help with their support of daily living. If you’re the one paying the spousal support, it’s best to discuss any deductions that can be claimed for the amount that you pay to your ex-spouse to bring you to a better financial standing in the future.
In Canada, divorce is not an uncommon occurrence, but it’s not an easy process by any means. With the help of a professional, though, you can make the best of your divorce while also knowing that your taxes will be filed correctly.
Looking for a tax professional in Alberta? Alberta Divorce Finances is a divorce financial planner in Calgary that can help you understand your finances. Get in touch with us today!