January 22, 2019

Divorce and taxes

You may think that your legal issues are done after your divorce is settled, but there is still one thing you have to be concerned about and that is your taxes. The Canada Revenue Agency (CRA) has to consider you legally separated and has to be informed of your change in marital status. If children are involved, then you will need to determine who claims the tax credit for eligible dependents and collects child benefits. Failure to be aware of CRA’s requirements and your changed tax situation can be very costly.

Key Takeaways:

  • If you’re recently divorced, the CRA expects you to notify them by the end of the month following the month your divorce was finalized.
  • A change in marital status can affect everything from total household income to your ability to qualify for certain tax credits.
  • Child support is not taxable income by the person who receives it, and the payer can’t claim the support as a deduction. Whereas, spousal support is fully taxable as income, and the paying spouse can claim it as a deduction on their return.

“Changes in your marital status can have a big implication on your taxes and on your financial situation,” says Boivin. “This might be a good time to sit down with your financial professional and review your overall situation.”

Read more: https://www.bnnbloomberg.ca/divorce-and-taxes-1.1126562

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