How to beat the solo tax and qualify as a single income earner | CBC Life

More Canadians live alone than ever before. To follow Statistics Canadathe number of single-person households more than doubled between 1981 and 2021 to 4.4 million, making them the most common households in the country. Today, about 15 percent of people age 15 and older live alone.

Yet “our society is not structured in a way that really supports single people,” said Jackie Porter, a certified financial planner and founder of the organization. The Jackie Porter Club. Many people who find themselves alone feel the effects of what is often called the “single tax”: an additional financial burden for those who are single, married or in common-law relationships. Experts say that putting yourself first as a single earner means being aware of these issues and creating a sustainable financial plan that considers their implications.

What is the personal income tax?

Renée Sylvestre-Williamsjournalist and author of The Singles Taxdefined it as “the intangible and tangible difference in costs that singles pay compared to married couples.”

For example, a single person who lives alone will not benefit from different economies of scale. There are no opportunities to share fixed household expenses such as rent, internet and utilities. Single people may also pay more tax if they can’t get certain deductions or split income with a spouse, Sylvestre-Williams said.

From higher living expenses to paying single occupancy supplements when you travel (an additional fee charged to guests staying alone in a double room), “you pay a lot as a single person, unfortunately,” Porter said.

This issue is part of the system. Sylvestre-Williams said the importance of creating affordable housing and highlight advocacy groups such as Single Adults for Tax Assessmentwhich is “laccording to its website, according to its website it says: “Despite the fact that this financial burden is not an organized tax group, the consequences are real and affect the finances of people who find themselves alone every day.

Personal taxes and your finances

The need to bear high fixed costs of living is the most important example, but other costs can increase. When you travel, having to budget for one supplement can affect where you go and where you go, because many companies price their group travel products based on having two paying adults in the room.

To eliminate this, you can look for tour and cruise companies that waive the surcharge or ask for exceptions. “If it’s a last minute trip and they need to fill rooms, they can reschedule it to make sure they have full occupancy instead of going with empty rooms. Sylvestre-Williams.

Insurance is another important consideration. Single income earners are often advised to look into critical illness and disability insurance to protect against potential loss of income.. This can provide a financial safety net for you and any minor dependents. “If something happens to you, you don’t have a second income to fall back on,” he said Sylvestre-Williams. For the same reason, he recommends creating an emergency fund that you can tap into if you are unable to work for a period of time.

Additionally, singles may face higher per-unit costs when purchasing essentials, as they will not be able to take advantage of joint pricing. To eliminate this, you can explore community opportunities to share costs and save money. Sylvestre-Williams sometimes splits bulk grocery shopping with friends and family, and suggests checking out local “buy nothing” groups and lending libraries to cut down on individual expenses.

Financial planning as a single income earner

Both Porter and Sylvestre-Williams emphasized the importance of recognizing personal income tax and planning its effects on your finances.

Start by talking to a financial advisor who can help you understand your situation and create a plan. This can include how to prepare for retirement as a single person and what you may need to consider as you get older. “Having an idea or a plan that works for you, I think, is one of the best ways to sleep at night,” he said. Sylvestre-Williams.

Retirement planning is very important as some tax benefits are not available to individuals. “If you have someone to split the money with, you might have a bigger Old Age Security credit and get more … than you would on your own,” Porter said.

In addition, you will need to save more for retirement than a joint venturer. “I think being financially conscious is about, especially when you’re single … creating that financial plan,” Porter said. “It’s our savings plan.”