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Hi Everyone,
I'm very new to the daycare scene. I just started up at the end of march.
I am hoping you can all give me helpful points and tips for taxes next year.
I am currently putting away between 25-30% of the total amount I make a month.
Is that enough, is it too much?
I have been saving all receipts for everything I buy. And saving all the household bills
Just wanting advice on anything and everything I could possibly claim!!
Thanks :)
I would say that is definitely enough....but really, there are so many factors that play into it that it's hard to say for sure. It would be helpful to at least talk to an accountant and get a better idea of what to expect. Also, you will be required to pay your own Canada Pension contributions since you will be self-employed.
Yes, definitely save your receipts, you can claim a portion of some of your household expenses (power, heat, property taxes, etc) if you run your daycare in your family home. Food and drinks, wipes, toilet paper, etc. Craft supplies, cleaning products. You can also claim a portion of the cost of "capital" expenses like a stroller or crib.
I do my own taxes (I worked in accounting in my previous job), but I only claim current expenses, not capital as I can't be bothered depreciating a $100 stroller over 5 years...and I have a very small set up and hardly ever buy big ticket items, the last "investment" I made was a laminator and it was $30 :)
I'm sure there will be others on here who can give you more info on how to claim all the deductions you are entitled to!
*Just to give you some idea, I end up owing the CRA about 8% of my gross income when all is said and done....and most years it is almost all going into Canada Pension.
Same here, I just found out tonight (right under the deadline LOL) that I owe 6 1/2 percent of what I made. Pretty good, but I still don't want to give it to the government!!!!
How does paying into Canada pension work?
When you are an employee, your employer pays into the Canada Pension plan, and also deducts money from each of your paycheques to submit on your behalf.....when you're self-employed, you pay both portions yourself! It is about 10% of your NET earnings. When you file your income tax you would also fill out a form (Schedule 8) that determines how much you have to pay for the year. You are then able to deduct 50% of that amount as a reduction in your net income, and also can apply 50% of the amount as a tax credit.
Remember that you are only taxed on the amount you have left over after your deductions so if you made $40,000 but had expenses of $15,000 then your taxable income is the $25,000 left. In other words when you are putting away a percentage make it on what your taxable income was this year.