Tax Tips for Canadian Freelancers

It is almost tax time for Canadian tax filers but did you know Canadians who are self-employed receive an extra six weeks to file within. Your documents are due June 25th, however, if you owe the tax man the interest on payments starts on May 1st this year. So what tax tips do I have for freelancers who may have just started living the gig lifestyle or just started working for themselves?

Keep Accurate Records

Can I confess something? The first few years I had my blog I kept no records, but that is ok because I earned no revenue from my blog. It was a passion project, a hobby. Once it became an income earning blog it was important to have accurate records of payments, gifts received and expenses.  It was and is important to keep accurate records for seven years.

Declare It

I know many freelancers who “forget” income. Did you get paid with a gift card my blogger friends? That counts as income? Did you receive product for writing a review, that is income? Are you earning money from a side hustle while working a full-time job? You have to declare that as well.

Expense It

When you start working for yourself, you quickly learn how many things you can now expense. Your home office becomes an expense, that laptop you just bought, your cell phone that you are using for your business is an expense, those new daycare toys, those new tools. The list goes on.

Some of my favourite write-offs include:

  • Transportation to and from gigs, conferences, or seeing clients.
  • Reasonable food, beverages, and entertainment expenses. (Food bloggers love this one.)
  • Learning( take a course, you can write it off if it relates to learning skills you need for what you do.)
  • The Home Office ( take the square footage of your office space divided by the total square footage of your home to calculate the part you can deduct)
  • Car Expenses( use your car for what you do, keep logs and repair receipts)

These are just a few of the things you can claim as a freelancer if you have the receipts, that is why it is so important to keep careful accurate files.

Save It

You should be saving some for the tax man. You definitely do not want to be left owing the tax man. I recommend saving at least 30% of your income for CPP and taxes.

File It Yourself

Even a busy small business owner can file their taxes themselves with the ease of the TurboTax Home & Business software. Your personal tax return and your business return are one and the same. Remember you do have to fill out a Statement of Business Activities.  One return will cover your entire life and that is a good thing!

If you would like more tax tips for the Canadian freelancer or small business owner, check out the TurboTax Canada blog

Win

Leave a blog post with your tax tip for freelancers and you can win a copy of TurboTax. There are 5 copies to win!

* Giveaway is open to Canadian tax filers and the giveaway closes April 25th at 12:00 am.

 

 

 

Talking Freelancing & Taxes with TurboTax Canada #CDNmoney

It is the time of the year, as the snow melts everyone is getting ready to file their taxes. If you are self employed like me, this time of year might scare you a little. I know it does me. This year I have partnered again with TurboTax Canada to bring my readers and those that participate in the #CDNmoney chats on Tuesdays the latest information when it comes to taxes.

This Tuesday night, March 29th is our first chat and we are talking with freelancers about taxes. One of the things I do love about using the TurboTax software is that it is so easy to use. It provides the self employed blogger like me extra guidance as we walk through things like self employment income and deductions. It helps you file your personal and unincorporated business taxes together.

When it comes to all those deductions we can claim there are clear paths to claiming old space, travel expenses and vehicle expenses. If there is an expense you can claim this software knows about it.

Even if you run into an issue I love that there is free tech support. What are some of my top tips for my fellow freelancers?

1. Save ALL your receipts and invoices.

The government requires that you provide receipts and invoices. If you are audited you need to be able to back up your claims. No guess work allowed.

2. Set a budget for taxes.

Unlike salaried employees, you are not paying deductions for things like income tax, CPP or EI. You need to contribute the employee portion of these which can prove costly. A good standard to go by 30% of your income.

3. Contribute to your RRSP.

Freelancers can not rely on the company retirement plan. They need to have a retirement plan of their own.

4. Home Office Deduction

Be careful with this one, make sure your deduction is reasonable. If your office space takes up 20% of your housing space then that is what you claim. Some of the extra things you can claim internet, phone, home insurance, heat and hydro.

Are you a Freelancer-

Now, if you are like me you always have questions when it comes to tax time, so I am hoping over the next month as we talk taxes with my friends at TurboTax for the #CDNmoney chat each week you will join the conversations.

You can even win tax software! Each week, TurboTax will be giving away 4 downloads of their software, that will definitely come in handy as you get ready to file yours. This week 4 people will win a copy of the Home & Business edition.

Hope to see you tweeting with us this Tuesday March 29th at 7pm EST. No RSVP required!

Want more advice for Freelancers from TurboTax check out this page.