Think You Are Done Your Taxes? Find out what you could be missing if you have recently divorced
There is one aspect to the process of divorce that almost none of us takes into account: taxes. This is because most of us deal with taxes only once per year, and it can be very easy to forget about that process.
Taxes and Divorce
Choosing to divorce is a difficult decision for a lot of reasons. After making the decision to go forward with the process, the next step is to decide which path to go down. You can find a lawyer, a mediator, or attempt to go through the path yourself. You can also use Fairway Divorce Solutions to work with the financial experts of divorce.
Taxes and divorce are two of the uglier subjects in life, but they can be a part of the process of separation. You might think that once the divorce process has been completed, you simply clean your hands and move forward. The thing is, that could not be more wrong.
You need to ensure that you have conduct your taxes in the proper way and have the right forms so that once tax season comes around, you are as prepared as possible
Important Tax Forms
To ensure that you are taking the proper path when dealing with divorce and taxes, you need to ensure that you have the proper forms. Making certain that you submit the right forms to the Canada Revenue Agency is essential; these are the forms that you will need:
- RC65 Marital Status Change
- The Marital Status Change form informs the CRA of a divorce or separation.
- T1157 Election for Child Support Payments
- The Election for Child Support Payments form allows parents with court orders or written agreements made before May 1, 1997, to choose to have child support payments payable after a set date not taxable for the recipient or deductible for the payer.
- T1158 Registration of Family Support Payments
- The Registration of Family Support Payments form advises the CRA of a court order or written agreement made.
- RC66 Canada Child Benefits Application
- These forms ask the CRA to recognize a change in parenting arrangements for a child (children) for whom benefits are being or could be paid.
- T2091 Designation of a Property as a Principal Residence by an Individual (other than a Personal Trust)
- This particular form informs the CRA of the dates a home was designated as a principal residence.
- T2220 Transfer from an RRSP or RRIF to Another RRSP or RRIF on Breakdown of Marriage or Common-law Partnership
- This form informs the CRA of the transfer of holdings directly from one former spouse or common-law partner to the other former spouse or common-law partner.
- T2151 Direct Transfer of a Single Amount Under Subsection 147(19) or Section 147.3
- This particular form informs the CRA of the movement of a one-time amount from one spouse’s asset (pension, RRSP, RRIF, etc.) to the other former spouse’s according to a written agreement or court order.
- T1198 Statement of Qualifying Retroactive Lump-Sum Payment
- This form advises the CRA of a lump-sum payment that qualifies for special tax treatment.
- T1213 Request to Reduce Tax Deduction at Source for Year(s)
- This form asks the CRA for permission to ask an employer to reduce taxes deducted at source from salary or a lump-sum payment.
- TD1 (Federal; Provincial & Territorial) Personal Tax Credit Return
- This form will give your employer information regarding the above form.
- T1013 Authorizing or Cancelling a Representative
- This form gives the CRA permission to disclose income tax information to the person named on the form.
Again, keep in mind that deciding to get a divorce and choosing the right path to get there is not all that entails the divorce process. The division of assets during the divorce process is both complicated and inevitable.
Your finances should not be toyed with; how you divide those assets and how well the process is handled can have an effect on your taxes and how well prepared you are when tax season comes to you as a new divorcee.