Wedding Season is Here – financial benefits of getting married!
May 25, 2017Building Your Future
It’s the season for weddings and being newlyweds means needing to be educated when comes to the financial realities of life with a spouse. A solid financial foundation for the future includes a financial planning strategy to help people reach their financial goals.
If you are getting married below are some of the financial benefits from a Globe and Mail article that accompany saying “I do”:
- Claiming a spousal credit. If your spouse has income below $11,635 in 2017 then you’ll benefit from claiming the spousal credit, which could save you as much as $1,745 in federal taxes.
- Using spousal RRSPs. You can split income in retirement and save tax dollars by contributing to a registered retirement savings plan for your spouse. In a perfect world, you and your spouse should have equal incomes in retirement. This idea can help.
- Transferring tax credits. If your income is too low to benefit from certain tax credits, it’s possible to transfer some to your spouse, including the age, pension, caregiver, disability, tuition (up to $5,000), education and textbook tax credits (the last two disappear after 2016).
- Minimizing RRIF withdrawals. You can minimize the taxable minimum withdrawals from your registered retirement income fund by basing your withdrawals on the age of the younger spouse.
- Transferring dividends. You can elect to transfer all your Canadian dividends to your lower income spouse if this will increase your spousal credit (see above). You could pay less tax as a couple.
- Tax-free rollovers. When you pass away, you’ll be deemed to have sold virtually everything you own, which can give rise to taxes on capital gains. Leave those assets to your spouse and taxes will be deferred until your spouse dies, or sells the assets.
- Splitting pension income. If you receive eligible pension income, you can transfer up to one half of that income to your spouse. You’ll both be able to claim the pension credit and tax savings can be significant.
As newlyweds you will need to work together to form a solid financial foundation for the future, that includes a financial planning strategy that will help you reach your goals together. Visit faithlifefinancial.ca to find a Financial Representative who will give you a FREE financial review today!
Original article written for the Globe and Mail by Tim Tim Cestnick.