My wife and I are co owners (50/50) of our (very small) business. Two seperate returns?

[Rossww]

So, we're co-owners however, I don't know if I should file separate returns for each of us.

If so, do I simply copy every entry from my return to hers? Do I have to enter the deductions, expenses, income, etc at half the actual amount in both returns?

Alternatively, do I just make one complete return and check the box stating "I have no income to report" (or something similar) for the other report.

Or (last one, I promise) do both returns get filled out simultaneously?

A very quick response would be greatly appreciated :)

[Geo123]

Hello Rossww,

You enter Income / Expenses / CCA once in your Tab and UFile transfers to the spouse the % partnership share eg. 50% (see below #9).  You must create a Family Head and Spouse in the same account.  Here is the detail on how to enter the T2125 :

1. On the "Left-side menu on the Interview tab", select "Interview setup".

2. On the screen that appears on the right, go to the "Self-employment" group, check the box "Self-employed business income", also if you paid tax by instalments. Then go to the "Tax paid by instalments and tax transfer" group and check the box "Tax paid by instalments and tax transfer" and click "Next" at the bottom of the page.

3. Return to the "Left-side menu on the Interview tab", click on "Self-employment income" and select the option "T2125 - Business income" on the right-hand side page.

4. On the "Business identification" page, enter the name of your business on the line "Business name (or your own name, if the business does not have one ", then enter the other information in the mandatory fields marked with a red asterisk.

5. On the field for "6-digit code from the North American Industry Classification System", enter the NAICS code that best describes your industry. If you do not know the NAICS code, click on the tool tip (the question mark) (?) on the right-hand side of the box to access a list of NAICS codes.

6. On the line "Products or services and their respective percentage (%) in the total income (mandatory for a Quebec return) ", in the field on the right, enter your main service or product and enter the percentage (%). If you have other products or services, click on the "plus sign +" icon on the right to generate another field.

7. Subsequently, after identifying your company, a submenu will appear in the "Left-side menu on the Interview tab" to allow you to enter the "Income & expenses", "Motor vehicle expenses", "Home office expenses" and so on.

8. On the next page ''Income, expenses'', on the line ''Gross sales, commissions or fees'', you must enter a value, if you have no income, enter $0,00 as this is a required field. NOTE; for expenses, if your company is registered for GST and HST (QST), these expenses must be entered before taxes to reflect the ITRs (input tax refund) and ITCs (input tax credit) you claimed.

9. If you had partners, choose the subsection "Partners" and if you want to claim capital cost allowance for your office furniture and equipment, choose subsection "CCA" and select on this page the classes that apply to your profession.

10. For residents of Quebec, if you wish to pay your registration fee for Quebec, return to the "Left-side menu on the Interview tab" and click on "Selt-employment income" On the scren to your rigth, choose the option ''Q438 - Quebec annual registration fee for the enterprise register''.

We recommend that you read the T4002 guide published by the CRA, for more information on what qualifies as a business expense.

For more information, please visit the following link:

https://www.canada.ca/fr/agence-revenu/services/formulaires-publications/publications/t4002.html

For Quebec residents, we suggest that you consult the "Business and Professional Income" guide, published by Revenu Québec. You can visit the following link:

https://www.revenuquebec.ca/en/online-services/forms-and-publications/current-details/in-155-v/

The program will also generate federal form T2125, as well as Quebec form TP-80 if applicable.

The gross amounts will be reported by the program on lines 13499 and the net income on line13500 of the federal return and, for Quebec residents, on lines 12 and 22 of Quebec Schedule L.

[KeitHamuci]

To answer your question, it's best to consult with a tax professional to determine whether it's better to file separate returns or one joint return. They'll be able to advise you on the best approach based on your specific circumstances. You may also need help at https://www.ogscapital.com/business-plan/manitoba-mpnp-visa-business-plan/. You'll need to make sure that both returns match up in terms of the numbers reported, so copying every entry from your return to your spouse's return is not recommended. If you decide to file one joint return, you won't need to worry about dividing the deductions and expenses evenly between the two of you.