If you and your spouse separated in 2018, you may want to know about these financial tips before tax season ends at the end of this month.
- If you received spousal support, you may have additional income for which tax is payable. You may be able to offset some of that tax payable by making an RRSP contribution. RRSP contribution for 2018 is March 1.
- If you are negotiating a divorce settlement, a special planning opportunity is available where a spousal RRSP contribution can be made. The contributing spouse receives the tax benefit, and the usual attribution rules do not apply. The receiving spouse can withdraw the funds and will be taxed based on their income.
- Childcare expenses: While married, the deduction for childcare must be used by the lower income-earning parent. If you were separated during the year and met the following criteria, the higher income-earner would be eligible for this deduction: (You were living apart at the end of the year; The period of separation was a minimum of 90 days in the year; The higher income-earner paid the childcare expenses).
Once the separation lasts for an entire year, the claim is ruled by which parent paid the expenses and how long the child was living with each parent.