Last year I welcomed a new client who is a sole proprietor and his partner who earns a modest employment income.
This year the client has returned and mentioned his spouse will be doing her taxes herself. (I’m assuming it’s to save alittle money - the cost of living has gone up and her return is straight forward)
I’ve never been in this position before nor filed one partner’s return and not the other (they are common law).
Spouse 2022 return items:
Two small T4’s
Two RRSP slips
Childcare expenses
How would I approach completing his return if she plans on completing her return on her own? I do want to be sensitive because everyone has different financial situations.
I would open and populate the spouse with the financial information which could affect the other spouse’s income and deductions. You need to watch out for the Climate Action allocation and establish who is eligible for the child care and other possible expenses/credits like medical and donations.
I agree with the previous replies. Note as well that if either partner is receiving any pension income, they could potentially miss out on pension income spliting.
I advise them to have both tax returns done by the same party - they both have to file as married or common law. There is a place to record the spouse’s income on the return you are doing.
Personally, I just offer to do the spouse return for free. Less hassle, and I know both parties’ returns are correct.
Yes, of course you can do them separately, and I do have some spouses who do so, but they’re mostly old, retired and have no ability to share any form of deduction or credit.
You could complete the T1 as in prior years and then indicate that the spouse isn’t filing in the side bar under “tracking” or if you uncouple the return you could then enter the information directly on the schedule 2 on the husbands return.
Thank you everyone for your helpful replies. @SmallBizGuy That’s very impressive. Maybe one day when I have reached your level of success I will consider offering to complete the spouse’s return for free.
I offer a significant discount to couples for this exact reason. My starting rates are $110 per return or $160 per couple. I also explain to them how it would be in their best interest to have everything in one file for optimizations of deductions and credits (ie donations, medical, etc), especially if there are children. Most of them have decided to have me do both. I agree with @SmallBizGuy if the revenue from that one client is enough, I would just do the spouse’s for free. Depends how much you like this client
It becomes more and more difficult to do a proper job when you are only preparing one return. Pension splitting is obvious but more recently we now have to deal with Canada Workers Benefit as well as Advanced Canada Workers Benefit paid to the spouse (RC210). A couple of years ago it was spouses arguing over CAIP credits.
