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How do I use the Pension Splitting Optimizer for my spouse or common-law partner’s final return?

by TurboTax•51• Updated 3 weeks ago

TurboTax’s Pension Splitting Optimizer automatically suggests the best pension distribution for you and your spouse/common-law partner to pay the least tax. In TurboTax Online, the optimizer is available only when preparing a coupled spousal/partner return in TurboTax Online.

If your spouse/partner recently passed away, we’re very sorry for your loss. You’ll need to complete their final return separately from yours because their final return will have to be paper filed. To use the Pension Splitting Optimizer, you can first prepare a “mock” coupled return. This will provide the best pension split amount to enter on each of your actual separate returns.

Note: Enter the same information (T-slips, receipts, and so on) on this mock coupled return that you'll use on your separate actual returns. You'll prepare these actual returns after first determining the optimal pension split amount using the mock returns.

  1. At Which of these applied to you in 2024? select the appropriate boxes, including Retired/received pension for one or both spouses/partners.
  2. Continue to Who are you preparing this return for?
  3. Select My spouse/partner and me, and continue.
  4. At What's your spouse/partner's name?, don't check the box for This return is for a deceased person. If you check it, it will disable the pension splitting optimizer.
  5. Complete the steps that follow until you unlock 2024 tax return.
  6. Select and complete your Tax Profile.
  7. Use the toggle at the top of the display to go to the other spouse’s 2024 tax return, select Tax profile, and complete it. For each spouse/partner:
    1. At We'll start with info about your work and income, select the applicable tax slip(s) for pension income (T4A for example).
    2. At Let's see if there's anything else to add, select I want to split eligible pension income with my spouse/partner.
  8. Input all income, deduction, and tax credit information for both spouse/partners, until the recommended step at 2024 tax return, under What’s next, is Review your return.
  9. Ensure the toggle switch’s (blue) dot (at the top of the display) is beside the spouse with the higher pension income, and select Continue. 
  10. At Let's double-check that we have everything, select Continue.
    • The Pension Splitting Optimizer is triggered.
  11. At We've Optimized Your Pension Splitting, make note of the optimal pension split amount.
  12. You can now leave this mock return and prepare your actual returns, using the split pension amount you noted from the previous step in the couple’s actual separate returns.