2016-12-01 00:00:00TaxesEnglishReview the advantages of making your common-law partner or spouse a partner in your business. Learn how this tactic can lower your family's...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/spouses-pose-at-family-farm.jpghttps://quickbooks.intuit.com/ca/resources/taxes/accounting-tips-form-a-partnership-with-your-spouse/Accounting Tips: Form a Partnership With Your Spouse

Accounting Tips: Form a Partnership With Your Spouse

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If you are married or in a common-law partnership and have more income than your spouse, your spouse will end up paying a relatively low income tax rate while you face a relatively high rate. However, if you split your income between the two of you, that can help to even out your tax rates and lower your family’s overall tax burden.

If you are self-employed, you may effectively split your income by making your spouse a partner. Members of partnerships each report their income separately. For example, you could each report 50% of the earnings, or choose another arrangement such as you report 60% while your spouse reports 40%. However, for this technique to work, you must both be actively involved in the business. You may not split your self-employment income unless you are actually working as partners.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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