Margot, 68, has an annual eligible pension income of $34,000 from a private company pension plan. Her spouse, Paul, 70, has no pension income. They wish to maximize their pension income splitting to reduce their overall tax liability. What is the maximum amount of pension income Margot can split with Paul?

Question: Margot, 68, has an annual eligible pension income of $34,000 from a private company pension plan. Her spouse, Paul, 70, has no pension income. They wish to maximize their pension income splitting to reduce their overall tax liability. What is the maximum amount of pension income Margot can split with Paul?

Answer options:

• $0
• $10,000 ✅ $17,000
• $34,000

Correct answer: $17,000

Explanation: A taxpayer can split up to 50% of their eligible pension income with their spouse. Margot's eligible pension income is $34,000, so she can split a maximum of $34,000 * 0.50 = $17,000 with Paul.