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

by TurboTax•7• Updated 1 month 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. On the Which of these applied to you in 2024? screen, select the appropriate boxes, including Retired/received pension for one or both spouses/partners.
  2. Continue until you reach the Who are you preparing this return for? screen,
  3. Select My spouse/partner and me, and continue.
  4. On the What's your spouse/partner's name? screen, 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 screens that follow until you unlock the Tax home screen.
  6. Select and complete your Tax Profile.
  7. Use the toggle at the top of the screen to go to the other spouse’s Tax home screen, select the Tax profile, and complete it. For each spouse/partner:
    1. On the We'll start with info about your work and income screen, select the applicable tax slip(s) for pension income (T4A for example).
    2. On the Let's see if there's anything else to add screen, 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 under What’s next is Review your return.
  9. Ensure the toggle’s (blue) dot (at the top of the screen) is beside the spouse with the higher pension income, and select Continue. 
  10. On the Let's double-check that we have everything screen, select Continue.
    • The Pension Splitting Optimizer is triggered.
  11. On the We've Optimized Your Pension Splitting screen, 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.