Everyone wants to have the option to minimize the amount of taxes payable. Claiming a deduction for a dependent has become quite the regular practice for this purpose. To claim a dependent based on dependents, you must first understand the eligibility and criteria for dependency.
To claim deduction on dependency, you would have to ensure CRA (Canada Revenue Agency) eligibility first. Many people don’t have the slightest clue about how far out the dependency eligibility can be stretched out. You could possibly get a tax deduction for one of your parents and/or grandparents in addition to your spouse or child.
There are several rules and regulations determining eligibility criteria. In this article, we will discuss the regulatory factors of claiming dependency and if and how you can claim your spouse as a dependent according to Canadian law. Still, we recommend contacting an experienced lawyer who is willing to listen to your concerns and provide you with the best possible advice.
The word dependent, defined in normal terms, translates to “a person relying on another, especially a family member, for financial support.” The CRA (Canada Revenue Agency) uses a similar dependency definition for income tax purposes. However, qualifying for dependency varies by credit.
Generally considering, children would be most commonly thought of as dependents for the purposes of income tax, which they are. But other relatives are also oftentimes eligible to qualify as dependents. You would be able to claim a person as a dependent if they live with you and rely on you for physical and financial support.
You might also be able to claim several credits, expenses, and amounts when providing care is considered. However, it’s not all the same conditions considering dependents.
How Much Can You Claim on Your Taxes for Your Spouse?
The amount of federal income tax owed is typically determined by an individual’s earnings. Taxes might be split between a spouse or common partners. The Canadian Revenue Agency has a reasonable deduction system in place that allows spouses or common partners to split their taxes. Monthly income and tax payments, on the other hand, go in lockstep. The person who earns more money pays a higher tax rate. You can claim spouse tax if you have a dependent spouse. A supportive partner can claim a total or a portion of the maximum tax if the defendant earned no money during the year or earned less than the statutory amount ($13,229 in 2020, $13,808 in 2021 and $14,398 in 2022).
Eligibility for Dependency for Tax Purposes
To be able to claim a tax credit on dependency, you first need to understand the eligibility criteria for claiming dependency.
Following is a discussion on who can be eligible for dependency:
You can claim the spousal amount on tax credit if your spouse has a net income of less than $13,808, according to the basic personal exemption for 2021. This reduces your total taxable income and is a non-refundable tax credit.
If you have a spouse eligible for dependency due to mental or physical infirmity, you can claim an additional $2,295 tax credit based on that.
It is important to note that you would be able to claim one exemption for your spouse and one for yourself on a joint return.
Suppose you’re filing a separate return, on the other hand. In that case, you can claim an exemption for your spouse if only they did not have any gross income, not filing a joint return, and are not already legally considered dependent on another taxpayer.
Read More: How to Avoid Paying Spousal Support
You can claim dependency for your child who is up to 18 years of age. If the child is more than 18 years of age, claiming dependency would require physical or mental infirmity grounds.
As long as the child in question lives with you permanently, the child might as well be away at school and still be considered dependent.
Additionally, you might be able to claim amounts for a dependent child’s tuition and education, even if they are more than 18 years old. The dependent’s income will be reduced from your claim. Make sure you are completing their tax return first.
This would determine the amount you can claim for your own tax return. Students don’t usually earn too much. Hence, this can be a valuable deduction for the parents.
Adopted and stepchildren can be considered dependent as well if they match the criteria mentioned above.
Parent or Grandparent
If your parent(s) or grandparent(s) are financially dependent on you and live with you at your home, you can make the dependency claim for them too. However, the claim can be made for only one person.
Suppose you provide care for your mother and your father is also living with you. In that case, only your father can make a claim. Both of you can’t declare your mother for a dependent tax credit.
Your brothers and sisters (including brother-in-law and sister-in-law), nephew & niece, aunts & uncles can also be claimed dependent on you if they are, in fact living in your house and relying on you for financial and/or physical support.
Tax Credit for Spousal Dependency
While the criteria for dependency for all other people is quite clear, tax credit eligibility for spouses seems a little complicated. Let’s clarify this issue a little further.
Note: Line 30400 was line 305 before the tax year 2019.
You would be considered eligible to claim the amount for an eligible dependent on line 30400 of your return. To calculate your claim and provide certain details about your dependent, you have to complete the appropriate parts of Schedule 5, Amounts for Spouse or Common-Law Partner and Dependents.
You Have Told the CRA the Following:
- You were single, divorced, separated, or widowed and supported a dependent who lived with you in a home that you maintained during any time in the tax year under consideration.
- The dependent you supported were:
–your parent or grandparent by blood, marriage, common-law partnership, or adoption and was under 18 years of age or had an impairment in physical or mental functions
None of the following situations apply:
- You or someone else is claiming a spouse or common-law partner amount on line 30300 for this particular dependent
- You want to claim this amount for a person who is your common-law partner. However, you may be able to claim the amount on line 30300 of your return.
- Someone else is claiming an amount on line 30400 of their return for this dependent. If you and another person can both claim this amount for the same dependent (such as shared custody of a child) but cannot agree on who will claim the amount, neither of you can make a claim.
- Someone else in your household is making a claim. (Each household is allowed only one claim for this amount, even if there is more than one dependent in the household.)
- You were separated from your spouse or common-law partner for all of the tax year because of a breakdown in your relationship and were required to make support payments for the child for that year.
According to Line 30300 of the Canadian law for claiming deductions, credits, and expenses, you can claim the amount for your spouse or common-law partner if,
“at any time in the year, you supported your spouse or common-law partner, and their net income (Line 23600 of their return, or the amount it would be if they had filed a return) was less than your basic personal amount (or your basic personal amount plus $2,273, if they were dependent on you because of an impairment in physical or mental functions).
On the other hand, if you made support payments to your former or current spouse/common-law partner and you were separated for only part of the year due to a breakdown in your relationship, you would be entitled to a choice.
You may claim either:
- The deductible support amounts paid in the year to your spouse or common-law partner on line 22000 of your return
- An amount on line 30300 of your return for your spouse or common-law partner
You have the liberty to claim whichever you think is better for you.
However, if you have reconciled with your spouse or common-law partner before the end of that particular tax year, you can claim an amount on line 30300 of your return and any allowable amounts on line 32600 of your return.
Both of you can not claim the amount on line 30300 for each other for the same year.
The above-discussed factors all indicate that claiming your spouse as a dependent for taxes in Canada is not possible under general circumstances. However, there are also the addendums to those conditions that suggest otherwise. It’s necessary to consider your circumstances before filing. Some sound legal counsel could help you make informed decisions.