Tax Installments

[kindertime]

I didn't have to pay installments, and I owed $4300 on about $35, 000 gross last year(and I had tons of expenses) I think you need to consider total household income as well, and all of your personal family claims outside of business. Everyone has a unique set of circumstances.

I know my credibility is shot here, but I have to...
I would assume for you, the $35,000 gross is before you deducted expenses. That changes things a lot. Your taxable income comes after you deduct business expenses. And, the $4,300 is your total tax bill. That would likely be mostly CPP, which doesn't figure into whether you have to pay installments. (It could be something like $1300 tax and $3000 CPP)

I just spent more than an hour on the phone this morning with a friend who also does daycare. Last year, she stopped having an assistant "on the books" and her tax bill has more than doubled. She can no longer claim the expenses related to paying this person so she is on the hook for over $6000. (In Que. you can have 9 kids that are 5 and under if you have an assistant)

[5 Little Monkeys]

I am wondering what the reason is for paying in installments if over $3000 (was that the number?) If you had the full amount you owed ready to go, why can't you just pay it off in one shot? The highest I have had to pay is $2400 (some of that was CPP and EI) and I just paid it off as I don't like to pay interest if I can help it. I'm not sure if I would be able to pay $3000+ off in one shot but if I could, I would want too. Do I not have that option at all?

I'm still on a high from not having to pay taxes this year I only had to pay my CPP and EI...hoping next year it is the same!!

[kindertime]

I am wondering what the reason is for paying in installments if over $3000 (was that the number?) If you had the full amount you owed ready to go, why can't you just pay it off in one shot?

Again, some clarification. If you owe, say...$3000 for your 2014 taxes, the whole thing is due by April 30th. No installments. It's just due. The gov't is like us...they want to get paid on time. If you don't pay this amount by April 30th, you have late fees.

The installments come next time. If I owed $3000 in tax (not including CPP) for 2014, (due Apr. 30th, 2015) the CRA will assume that this year (2015) I will owe about the same on my taxes due Apr. 30, 2016. So, because they know it can be hard to come up with a lump sum in April, they ask for it in advance in installments.

Think of it this way, when an employee gets paid, there are payroll deductions made. One of those is for taxes. That is, in essence, an installment made every two weeks. When they do their taxes in April of the following year, they will put down that they have already paid $XX of tax. If the boss took off too much tax throughout the year, then they get a refund. If the boss didn't take off enough, they have a balance due.

I send Revenue Que. $200 every two weeks when I get paid. These are my installments. I don't have to make them every two weeks, only 4x per year, but it is easier this way. I do it all through online banking and it is just the same as if I had a payroll tax taken off by my 'boss.' Except I am my boss.

[emmsmama]

Thanks for all the replies. Just to clarify, I know I have to pay the 5K due now before the end of this month. Actually, I think I have until the middle of June to pay it because I'm self-employed, but either way, I know I have to pay that very soon and am prepared to do so. To the poster who asked how I owe so much, I don't know, part of it was reg. taxes and part was CPP (over 2K was CPP). In previous years I've made less and owed very little, sometimes only CPP, but this year I made about 32K and it came out to about 27K after deductions, so I figured I'd have a good amount to pay.

I was wondering how installments work is all. I'd rather just pay one lump sum at tax time so I can keep my money in my own account until then, but I also didn't want to get hit with interest or penalty charges for installments I hadn't even been notified of. If the CRA sends me something with my bill for this year that says to make installments then I'll make them as that is simple enough, but I was just freaked out because I had never, in over 10 years of doing home daycare, had to make installments. Then again, when I looked back to 2005, which is the oldest records I have, I realized I've never made as much as this year or had to pay as much. Not that 30K is tons of money, but it's more than in past years

[kindertime]

Thanks for all the replies. Just to clarify, I know I have to pay the 5K due now before the end of this month. Actually, I think I have until the middle of June to pay it because I'm self-employed, but either way, I know I have to pay that very soon and am prepared to do so.

Advice...be sure to check on that. I believe self employed people have until June 15th to FILE their taxes, but the money is still owed on April 30th. Anyway, double check unless you're sure.

[emmsmama]

Thanks, I plan on paying by the end of this month anyway, but it's good to know

[5 Little Monkeys]

Advice...be sure to check on that. I believe self employed people have until June 15th to FILE their taxes, but the money is still owed on April 30th. Anyway, double check unless you're sure.

Yes, this is correct.

[Spixie33]

Last year I made nearly 40 K and the accountant said I owed $4400. He said that I would likely be asked to make prepaid installments during the 2014-2015 year but I never got any notice of the sort. I got my usual notice of assessment and was told how much I owe and I paid it off within a month or so and that was it. They did not ask me to make payments towards the 2014 tax year.

So this April I did my taxes for 2014 and again I owe over $4000. I set aside about $100 a week so I am pretty much ready. I think over 2000 was CPP and another 2000 or so was income tax.

Don't panic about the installment part - because it was told to me but never came to happen.

BTW - you can call Revenue Canada and ask to make a monthly payment if you can't afford to pay what you owe all at once. I have done a monthly payment plan with them because I got blindsided by what I owed.

[Busy ECE mommy]

@Spixie33-mine was similar-over $4,000 owing, but 1/2 was CPP and the rest was federal and provincial tax. I'm guessing that's why the installments didn't happen. Perhaps you need $3000 of actual federal/prov. taxes before installments kick in?