The following are tax tips for newlywed couples. How can you save on taxes as new wedded couple.
You should start by investing into a home buyers plan. Most couples will buy their first home and that would be their biggest purchase by far. The mistake people make is not knowing that you can contribute to a home buyer plan and you can then save money when buying the first house. The home buyers plan works just like an RRSP. When you make a contribution to the plan then that contribution is tax deductible on your taxes and the earnings will grow free of tax. You may also take money from the home buyers plan to help purchase a home and the funds that are taken out are tax-free. There is however to this method. The maximum a married couple can contribute to this plan is $50,000
The next thing you can do is contribute to RSP’s. If you contribute, then you can receive a tax deduction right away when you file a return. As well as with the compounding of earnings that will be tax-free in your RRSP. As well as with the spousal RRSP if there is a lower income spouse then the lower spousal RSP is deductible to the lower income spouse and that way you are saving on taxes.
If you are thinking about having children then you should also know the cost for a childs education is extremely high and will continue to do so. The government gives you an RESP plan.
This plan lets you contribute money, but the money contributed is not tax deductible, however, the amount put in does grow tax free. So, if you invest a small amount day by day then with compounding it will grow into a big amount that is tax free. The government also provides grants of near 20% of the amount contributed. There is a cap on it though, which means the matching grant cannot be more than $500 in one year.
Income splitting is a strategy where the higher income spouse pays for all the bills and utilities in the house. The reason you will do this is so that the lower income spouse then has room for savings. You can the put the savings back into getting assets and the income that is earned will only be taxed to the lower income spouse. Since the lower income spouse is in a lower tax bracket they will have to pay less on taxes.
Child Care Expenses
Another easy way is to claim childcare expenses if you have children. These claims are only deductible from the lower income spouse, and would include expenses such as, babysitting, and day care. You do however need to keep receipts as proof incase the CRA ask for documentation.
The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Muhammad Nasrullah and Muhammad Nasrullah CPA Professional Corporation will not be held liable for any problems that arise from the usage of the information provided on this page.
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