Splitting Pension option

[Gil]

Does anyone know where in the 2020 tax year program, is the choice to choose to split your pension income or not to split your pension?

The 2020 program wants to split my pension income and it is not beneficial to do it.  How do I stop the program from splitting the pension income?

In the 2019 program it was in the interview section or the Controls.

[Curmudgeon]

Are you sure splitting is not beneficial? Compare total tax before and after split. It gets complicated because of OAS and age credit clawbacks.

[AltaRed]

I've seen at least a few instances on financial forums where people have brought up that issue. It must be a set of somewhat unique circumstances.

What I have advised people to do is as you suggest. Let Maxback optimize and then do a case with zero split to be sure.  If the zero split works out better, then one needs to iterate between 0 and Max to find out where the optimum is. I now do a zero split case just in case.....

Regardless, UFile needs to re-visit and QA the algorithms for those particular circumstances.

[Steve596]

Ufile has decided not to split my pension income for some reason. How do i override this? I have already changed it to "Transfer to spouse (if eligible)" and added the correct amount to transfer. I am going to guess it feels like I am not eligible.... How do I change that or tell ufile it is wrong and that I am eligible??

[Curmudgeon]

Did you try MaxBack to see if it finds a split?

[Billy-Bob]

I have tried Nawal's suggestion but it does not work. (I've tried all of these suggestions too.)

[ersmith]

Just had this same issue. couldn't understand why MaxBack assigned split pension amount to higher earning still employed spouse. Followed Nawal's suggestion above and was able to try with and without splitting. Turns out MaxBack was correct and resulted in approx $300 tax saving for us.

[Curmudgeon]

This is usually because of the OAS clawback. Say spouse1 has taxable income of $130,00 and marginal rate of 26%. At that income all OAS has been clawed back. Spouse2 has taxable income of $80,000 and a marginal rate of 20.5%. Spouse2 is in the OAS clawback range where OAS is clawed back at the rate of 15%. This is a marginal rate on OAS of 35.5%. Shifting pension from spouse2 to spouse1 more than compensates for the higher marginal tax rate.

Other factors like the seniors tax credit which is income related also come into play. There are common misconceptions that the lower marginal rate spouse should always receive the split or that the optimal split is always 50-50.

[Hack]

In the solution shown above step 5, “split income with your spouse” does not appear.  Where is it?

[Papet]

Good day,

As an aside note It is quite strange that none of the above exchanges mentions the document "Report on split-pension income" that is always part of each spouse's Tax Return when Pension splitting takes place.

[clw]

Does the ‘tax savings reconciliation’ amount on the last line reflect the amount  owed to the spouse accepting the transfer?

[Hack]

Papet.  Turning off split does not work. Asked program to not transfer but the program still transfers

 

[Papet]

Good day Hack,

I did tests and turning off Pension splitting worked fine.

Could you send an image of the Splitting of pension income between spouses page?

 

[Hack]

I’m not very tech savvy. Pictures too large to attach.  
what I did was change the amount to transfer to zero. It still split. When I try to edit, a box pops up saying I cannot make any changes

[Geo123]

Hello Hack,

In the Interview 

>>Pension and retirement income

T4A - Pension, retirement, annuity, and other income (COVID-19 benefits)

T4A(OAS) - Old age security pension income

T4A(P) - Statement of Canada or Québec pension plan benefits

T4A-RCA - Statement of distributions from a retirement compensation arrangement (RCA)

T4RIF - Income from registered retirement income fund

T4RSP - Income from registered retirement savings plan

Confirmation - You did not receive old age security pension

 

 Split pension income with spouse < - - HERE

>>Split pension income with spouse

Splitting of pension income between spouses

    >>Do you wish to split eligible pension income with your spouse?

 [Do not transfer to Spouse]

OR

[Transfer to Spouse]

If Transfer ..., enter the amount of eligible pension income to transfer to your spouse [   ]