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.

 

 

 

Last Minute Tips for Canadian Tax Filers

LastMinuteTips

It is that time of the year; tax season is in full force, and there are just 10 days left to file your 2014 tax return. Now many Canadians will of left it to till this week, in fact, way too many files late and some do not even file and lose out on thousands of dollars that could have been theirs. So if you haven’t started your return now this is the week to get it down, and I have a few tips for those of you who are just getting around to it.

Make sure you have declared all your income.

So many people forget little projects especially if they are freelancers. It is so important not to forget as you can be audited. So remember, collect that old T4s, the stubs from that side project.

Collect your receipts

So many people when they are in a rush as the tax deadline approaches forget some things that could have them getting money back like transit receipts, rental receipts, kids’ lessons, and if you have a small side business your business expenses.

Be aware of Changes that have come about this year as well.

The 2014 tax year saw some big changes like the Family Tax Cut, the doubling of the Fitness Tax Credit and the increase to the Universal Child Care Benefit. You can read more about what the tax changes mean for Canadian families here.

Remember even if you have a low income, file.

There are many reasons to file even if you had very little income and paid no income tax. There are tax credits you may be entitled to like GST. For those with very simple returns, you can even file them for free with TurboTax.

One of the simple ways to ensure you don’t miss a thing, is by using a Tax software like TurboTax. It asks you all the right questions at the right times. It also offers services like TurboTax Live Tax Advice, which allows you to get answers from a real person as you do the work. After you are done doing the heavy lifting (filing) you can always have a pro take a look at your return as well with TurboTax’s Pro Review service, that way you can rest well knowing all is correct with your return.

If you haven’t filed yet, you can also win the tax software, TurboTax by following them on Twitter this week and next. They are giving away a couple of codes to their online service. Their twitter handle is @TurbotaxCanada.

 

 

 

 

Tax tips for the Canadian Single Parent

Tax Tips for the Canadian Single Parent

Tax tips for the Canadian Single Parent

Being a parent is hard, being a single parent is even harder in many ways at at tax time, there is much to think about this year and every year. As a single parent there are many things to remember and there are certain things you need to sort out with an ex especially at tax time.

Fortunately, there are some tax benefits, that can definitely help single parents and I was given some great reminders this week when I had a phone interview with Cleo Hamel, senior tax analyst with H&R Block.

Eligible dependants: A single parent can claim $10,822 for the amount for an eligible dependant (sometimes referred to as equivalent to spouse) for one of their children as well as the $2,191 Child amount. The child must be supported by you and living with you to do this.

So that means if you have:

Joint custody: If there are two children and the parents share joint custody, then each parent can claim the equivalent to spouse amount for one child. But note if you pay child support, you cannot claim this credit. That makes the difference.

Child Tax Amount: In primary custody situations, you are the only parent allowed to claim the child tax amount. For joint custody, then you have to agree  which parent will claim this credit. If you can’t agree then no one will be able to claim it.

Child Tax Benefit: This benefit is calculated by your household income level so the amount you receive depends on your earnings. The rates and amounts vary by province.  In joint custody situations, the benefit is split. You could get it for the months the child lives with you, or it could be half sent to you and half to the other parent.

Child Support: If your agreement is dated after May 1, 1997 then child support payments are neither taxable nor deductible although you do need to report them on your tax return.

Child Activities: The Children’s Fitness Amount can be claimed by either parent but cannot exceed $500 in total per child. There is also a Children’s Arts Amount of up to $500 per child. So that is a total of $1000 that can be claimed per child.

Childcare: Childcare expenses can add up but you must have receipts from your daycare or babysitter. If you are paying a family member to look after your children, this can be claimed as long as they are 18 or over and provide a receipt with their SIN. They will also need to report this income on their tax return. As well if you are not the primary custodial parent, and only have your child say on weekends you will not be able to claim this.

Changing status:  Did you move in with someone this year? If you move in with the other parent of your child, you are considered common-law for tax purposes straight away. If you move in with someone else, you are only considered common-law after you have lived together for a year. You need to report the change to the Canada Revenue Agency using a RC65 Form. This will affect your ability to claim the equivalent to spouse amount as well as your Child Tax Benefit calculation. It is important to do this right away as you could end up having to pay them back money.

Claiming dependants: Once a child turns 18 (that month), they are no longer considered a dependent for tax purposes even if you continue to support them. That means kids like my daughter who turns 18 while she is still in high school, is not longer a dependent. For me and many parents, we will be dreading this day as it will have major tax implications. One thing to remember as your child turns 18, talk with your employer to change your tax withholding or you may end up having to pay the CRA. The only exception is infirm children.

*  Information has been provided by H&R Block (www.hrblock.ca).  I have been financially compensated; however,  I am not obliged to give a positive review.  I am sharing what I knew and learned via our conversation.