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Thread: Tax question

  1. #1
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    Tax question

    So I have been reading some past threads about taxes looking for an answer to my questions, but so far i have found nothing. I don't know anything about taxes, so forgive me if i ask silly questions.

    -How do you know if you are going to owe or receive from the government? I was told once in terms of a small business like a home daycare, if you don't pay into the system, (ie CPP, EI etc) then you owe nothing, yet receive nothing back. True? false? please explain. I have never paid back or received $ and I worry that one day i am going to get pinned with a huge amount to repay.

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    ...I would say that's false ....if you make an income and don't have regular deductions (such as CPP and income tax) you always assume you will have to pay ...you should be paying into CPP .....last year at tax time I had to pay 3k (total tax and CPP) this year I got smart and started paying monthly installments so my amount owing wont be so huge when my taxes are filed. you should find an accountant to do your taxes and remember you can claim a percentage of your property taxes and mortgage interest as well as your utilities and a portion of your house

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    Quote Originally Posted by Crayola kiddies View Post
    ...I would say that's false ....if you make an income and don't have regular deductions (such as CPP and income tax) you always assume you will have to pay ...you should be paying into CPP .....last year at tax time I had to pay 3k (total tax and CPP) this year I got smart and started paying monthly installments so my amount owing wont be so huge when my taxes are filed. you should find an accountant to do your taxes and remember you can claim a percentage of your property taxes and mortgage interest as well as your utilities and a portion of your house
    Holy Crap! $3000!! Uh oh.. guess I should have started putting money away last year . Does anyone know if you can pay in monthly installments?

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    Gravy Train, if this is your first yr of business you may not have to pay anything with expenses deducted. To answer your question, I believe you can pay in installments but there is interest accrued.

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    thank you torontokids! mild panic attach going on here! how are you doing, anyway? make any decisions about your next career move?

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    Heh heh, thanks for asking. I am still sick, argh and so over being sick. I am still going to do daycare until Sept but unsure what I will do after. My old job just informed me that they will not extend my leave without pay (AKA safety net) until Sept. I might continue doing daycare on a smaller scale after Sept while I figure things out.

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  9. #7
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    As a self employed person, you MUST pay into CPP. You pay both the personal and employer contributions. You do not have to contribute to EI but of course you can not collect it.

    CPP payouts at retirement are based on how much you have contributed.

    If you manage to claim expenses that bring your income down to the lowest level then you will not owe any tax. It would be rare for this to happen after the first few years unless you are not actually making any money.

    So technically what you heard is correct. You can not claim EI if you do not pay into it and your CPP when you retire will be based on your contributions.

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    The amount owing will vary from person to person and even year to year. The way I understand it is, they take your total income and then deduct all your expenses. This number will be what you owe taxes on. For me, year one I had the daycare for 2 months and had to pay $300, year 2 I had a full year of daycare and had to pay $2400, year 3 is this year and I have no clue what to expect. My deductions are about the same as last year but I have signed up for EI and I think I pay that this year since I signed up in June for it.

    Last year I paid the whole amount at once (I believe we have until June 1st to pay it) and this year I have been putting money aside each month. I am hoping I will have enough saved up so that I can pay it in one shot again. There is the option to pay monthly or quarterly I think. I think you pay interest if you do that though. If I don't have enough saved this year I will pay what I can and then the remainder will have to be paid in payments. One of the things I forgot to do last year was set up an RRSP. I was told that for every $1000 I buy it would save me approx $260. I am not sure if this number is different for everyone. I am absolutely clueless when it comes to taxes and numbers LOL. I set up an RRSP for this year but I doubt I will be able to buy anymore than a $1000

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    torontokids is right. You can definitely pay in installments. I do. When you get your form confirming what you owe, just call them and they will help you set up a payment plan. They'll even adjust it depending on how many months you'd like to take to pay it. Plus interest of course!

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  13. #10
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    my first year I didn't make much ...I only had 1 ft 1 pt and 1 b and a ....so my accountant worked it out so that all I owed was the CPP....he didn't want to raise any red flags by having me get a refund....my next year and since then I have been full and I have owed 3k. as I said this year I started paying installments since june and so I have "money in the bank" so to speak...so when the accountant does my taxes what ever I have already paid will come off the total amount owing. if you were asking if you can pay installments after the taxes are done then the other ladies are right you can call them and set up a payment plan to pay it but it will have interest tacked on. I don't like paying the government any more then I have to so I am paying ahead of time to avoid the interest. also depending on what you have to deduct will have a huge bearing on what you have to owe.....for instance if you don't own your home you aren't able to claim the mortgage interest and property taxes(which is huge) but you can claim your rent. this year I have no big ticket items to claim such as play structures or high chairs or play pens ....so just basically a few toys and food/supplies as well as my utilitites ....im keeping my fingers crossed that its not too much more then last year

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