Think You Are Done Your Taxes? Find out what you could be missing if you have recently divorced
Taxes and divorce
Choosing to divorce is a difficult decision. The next step following the decision to divorce has a few paths that you can follow; you can go directly to a lawyer, mediation, do it yourself or to Fairway Divorce Solutions to work with the financial experts of divorce.
Once both decisions have been made and the process that you choose has been resolved, your hands are clean from forms and submitting documents regarding divorce…right? Wrong. It is important to know that divorce can change how you conduct your taxes once tax season comes.
Important Tax Forms
Here are the links to the forms that should be submitted to Canada Revenue Agency and a synopsis of their importance for all divorcees:
- RC65 Marital Status Change
- The Martial 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’s or common-law partner’s to the other former spouse’s or common-law partner’s
- 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 a 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
Remember that making the decision to get a divorce and choosing a path to take to get there is not the end of the journey.
The division of assets while going through a divorce is a complicated process and the person that you choose to manage them is an important decision. Your finances are earned and should not be toyed with. How you divide your assets and how well it is done will affect how you approach your taxes and how prepared you are for when tax season comes as a new divorcee.