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Any Tax Guru's Here?


Magikal

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Income tax filing, write off's etc. are a massive pain in the rump.

We are several months away from tax time but I wanted to get some advice from anyone here who can help give me some pointers.

1. I want to know what the different tax levels/brackets (whatever you call it) are. As in you make X amount of dollars per year so pay X amount in taxes.

2. Writing things off. I would like to be able to know what exactly it is I can write off for my work. Things like my vehicle, gas, gifts for clients, work clothing with my company brand on it, office supplies, dinners involving business meetings/discussions etc.

Any help is greatly appreciated.

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I work from home as a contractor - I'm allowed to "claim" for 10% (as my home office is 10% of the square footage of my house) of:

Heat

Electricity

Insurance

Maintenance & Repairs

Mortgage Interest

Property Taxes

Internet

Your best bet is to have someone do your taxes for you at least once, that way you will learn what you can and can't claim.

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Here's a few websites that may help:

Taxtips: http://www.taxtips.ca/taxrates/bc.htm

Take home pay calculator: http://www.taxtips.ca/taxrates/bc.htm

In terms of deductions etc, it really depends whether you are an employee, independent contractor/consultant, or a mix of both. Generally speaking, if you generate income as an employee, there are less deductions (unless your employer makes you pay for things without reimbursement). If you are a contractor/consultant, you can write off business related expenses, the rules for which vary depending on the type (vehicle, entertainment, home office rent, professional services, etc). Look around on the web for a general idea, but you may wish to find a small business accountant to help you come tax time.

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I work from home as a contractor - I'm allowed to "claim" for 10% (as my home office is 10% of the square footage of my house) of:

Heat

Electricity

Insurance

Maintenance & Repairs

Mortgage Interest

Property Taxes

Internet

Your best bet is to have someone do your taxes for you at least once, that way you will learn what you can and can't claim.

You submit a T2200 or something similar then? I've started looking at that as my company allows me to work from home but wasn't sure how it all works.

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I am in sales and lose a bigger portion of my cheque to taxes than others it seems. This cheque for example, they took just over 6600.00 in taxes.

I am wondering if I can write off my vehicle and gas if I demo it to clients (which I do) and if it qualifies as a business expense since I am driving the brand of vehicle that my store sells.

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I am in sales and lose a bigger portion of my cheque to taxes than others it seems. This cheque for example, they took just over 6600.00 in taxes.

I am wondering if I can write off my vehicle and gas if I demo it to clients (which I do) and if it qualifies as a business expense since I am driving the brand of vehicle that my store sells.

Probably not.. Unless the truck belongs to the company and you pay for gas and maintenance costs.

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When it comes to claiming business expenses, it's even more important to get professional help, since the laws can be complicated, and individual situations vary. Also, if you don't like what you hear from one, get a second opinion. We were going to an accountant, but we suspect that since we weren't big enough customers, he was basically phoning it in, and didn't dig into our situation enough to get us the deductions we deserved. Got referred to another professional tax person, and she greatly improved our return.

As far as tax brackets, one thing to be aware of is that the rate for those brackets only apply to the money in that bracket. For (a very simple) example, if you made $20,000 (keeping it low to keep the math simple):

if bracket 1 is 10% on the first 5,000 in taxable income: $500 tax owed on 5K taxable, plus

bracket 2 is 20% on $5,001 to 15,000 taxable: another $2,000 tax owed on the next 10K taxable, plus

bracket 3 is 30% on 15,001 to 30,000: another $1,500 tax owed on the last 5K taxable

total tax: $4,000

Reminder, these are not real brackets!

So, if you are in a higher bracket, it does not change the taxes owed on the income in the lower brackets. Basically, your highest bracket defines what tax rate you pay on the last dollar earned. Still, the more you can bring it down, the better. Good luck.

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I am in sales and lose a bigger portion of my cheque to taxes than others it seems. This cheque for example, they took just over 6600.00 in taxes.

I am wondering if I can write off my vehicle and gas if I demo it to clients (which I do) and if it qualifies as a business expense since I am driving the brand of vehicle that my store sells.

Taxes are the same for everyone making the same amount of money, so anyone with the same paycheque as you would get taxed the same (this does not include other deductions that may be specific to your job, such as dues, pension plans, benefits that you might have to contribute to).

If you are in sales and on commission, it is likely that your actual income tax amount will vary significantly, depending on how well you do in a given month. The amount of tax you pay on each cheque is essentially based on the assumption that you will earn that amount each pay cheque, over the course of a year. Of course, for sales that's not generally true since commissions can fluctuate a lot - but you get this money back when you file your taxes.

In terms of writing off car related expenses for demoing your personal car - the answer is yes, assuming you do not get reimbursed for the cost of using your car as a demo. If your employer reimburses you for mileage/usage, then you don't get to claim it usage as an expense. See here for more info:

http://www.cra-arc.gc.ca/E/pub/tg/t4044/t4044-e.html#P220_10437

Employment conditions

To deduct the expenses you paid to earn commission income, you have to meet all of the following conditions:

  • Under your contract of employment, you had to pay your own expenses.
  • You were normally required to work away from your employer's place of business.
  • You were paid in whole or in part by commissions or similar amounts. These payments were based on the volume of sales made or the contracts negotiated.
  • You did not receive a non-taxable allowance for travelling expenses. Generally, an allowance is non-taxable as long as it is a reasonable amount. For example, an allowance for the use of a motor vehicle is usually non-taxable when it is based solely on a reasonable per-kilometre rate.
  • You keep with your records a copy of Form T2200, Declaration of Conditions of Employment, which has been completed and signed by your employer.

For more information, see Interpretation Bulletin IT-522, Vehicle, Travel and Sales Expenses of Employees.

By the way, I am NOT an accountant or a financial professional, so taking anything from my posts is at your own risk! :)

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Taxes are the same for everyone making the same amount of money, so anyone with the same paycheque as you would get taxed the same (this does not include other deductions that may be specific to your job, such as dues, pension plans, benefits that you might have to contribute to).

If you are in sales and on commission, it is likely that your actual income tax amount will vary significantly, depending on how well you do in a given month. The amount of tax you pay on each cheque is essentially based on the assumption that you will earn that amount each pay cheque, over the course of a year. Of course, for sales that's not generally true since commissions can fluctuate a lot - but you get this money back when you file your taxes.

In terms of writing off car related expenses for demoing your personal car - the answer is yes, assuming you do not get reimbursed for the cost of using your car as a demo. If your employer reimburses you for mileage/usage, then you don't get to claim it usage as an expense. See here for more info:

http://www.cra-arc.gc.ca/E/pub/tg/t4044/t4044-e.html#P220_10437

By the way, I am NOT an accountant or a financial professional, so taking anything from my posts is at your own risk! :)

Well I do meet all those requirements so that is something I should investigate.

For 2 weeks in July

Gross pay 5755.47

Federal Tax 1745.64

I feel you man. Like I said this last cheque I gave the government 6600.

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You submit a T2200 or something similar then? I've started looking at that as my company allows me to work from home but wasn't sure how it all works.

The company that pays me gives me one so I can claim those expenses.

I have to request it every year though.

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Well I do meet all those requirements so that is something I should investigate.

I feel you man. Like I said this last cheque I gave the government 6600.

can i give you my resume. I have no education but I can play a killer game of ping pong. I pay like 12k for the entire year I wish I had a problem like giving the government 6+k from my paycheck unless I'm only getting payed once a year that is lol.
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The company that pays me gives me one so I can claim those expenses.

I have to request it every year though.

That was what I saw when doing a bit of research, but from talking with coworkers they've just been filling one out and having it signed off on.

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I am in sales and lose a bigger portion of my cheque to taxes than others it seems. This cheque for example, they took just over 6600.00 in taxes.

I am wondering if I can write off my vehicle and gas if I demo it to clients (which I do) and if it qualifies as a business expense since I am driving the brand of vehicle that my store sells.

I didn't know you had to claim taxes when you're selling a kilo of heroin.

What kind of "cars" are you really selling bro?

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Oh and I feel you on the taxes being a pain in the ass thing. I haven't done mine in two years and I probably have at least 10k sitting there waiting for me.

And I still manage to procrastinate on getting my receipts in order and finally getting it done.

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Income tax filing, write off's etc. are a massive pain in the rump.

We are several months away from tax time but I wanted to get some advice from anyone here who can help give me some pointers.

1. I want to know what the different tax levels/brackets (whatever you call it) are. As in you make X amount of dollars per year so pay X amount in taxes.

2. Writing things off. I would like to be able to know what exactly it is I can write off for my work. Things like my vehicle, gas, gifts for clients, work clothing with my company brand on it, office supplies, dinners involving business meetings/discussions etc.

Any help is greatly appreciated.

I am extremely curious why you felt the need to put an apostrophe in "guru's" and "writeoff's", but not any other pluralized word in your post...

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I am far from a tax guru, in fact I am quite weak in my tax knowledge (financial analysis/engineering is my thing), but I am an accountant so I have a rudimentary understanding.

If you made $16,500 in one pay period, and were paid semi-monthly, then it would appear that you will earn $396,000 per year, which garners a rate of about 40%, which would work out to about $6,600. So if you made about that much, then the tax they withheld is correct. There are also special tax rates on lump sum payments which cover things like receiving a bonus, these are taxed higher than normal employment income.

Taxes are calculated by assuming you will make the same amount every pay period for a year, this is a great way to calculate taxes, but if you have lots of ups and downs then you will end up over paying. You can sometimes get your workplace to calculate it differently, but most won't as it takes a lot of extra work and many are not comfortable with it, essentially if you underpay your taxes, the business is then liable to pay the balance.

If taxes are being withheld off your cheque, then you are likely an employee. Independent contractors and business owners have to remit taxes themselves.

If you are an employee, good luck expensing anything, there are exceptions but to my knowledge not many. Most of the time you will simply submit your expenses to your employer and they will reimburse you (those reimbursements will not have tax withheld and you do not need to include them in income on your tax return). Things like uniform costs, driving your personal vehicle for work purposes, etc, are actually business expenses, and in order for them to be tax exempt they should appear on the business' tax return, and then the business will not have to pay tax on revenue earned against those amounts. This has little to do with the employee, other than receiving a reimbursement.

Reimbursable expenses (and hourly pay) use the concept of 'rally points'. This means that your place of work is considered a rally point and any expenses you incur before you arrive / after you leave are not employment related (eg. you can't expense the cost to take the bus to work). This holds true so long as you are not required to work before arriving at the rally point. So if your boss tells you to pick up a coworker on the way to work, you not only get paid (assuming you get hourly pay) but also can get a reimbursement on driving expenses from the time you pick up the coworker to the time you arrive at work (note: this only counts if your employer requires you to do this, and not that you have done this by your own choice). Once at work, anything your employer requires you to pay for is reimbursable, those cannot be expensed on your taxes. If you are driving your personal vehicle for work purposes, then they will pay you a set rate per KM driven, but the onus is on you to track your mileage. If you tell a friend to jump in your car in order to attempt to sell them on a similar one, that is your own choice and the business is not required to provide reimbursement unless you have a signed agreement in place detailing such events. If your work asks you to use your car as a demo, then you can claim reimbursement for the mileage.

In order to claim expenses on your tax return, you need to be able to prove these are costs that you paid for yourself in order to work, rather than costs that you paid on behalf of your employer that they should be paying you back for. I imagine most of your costs are reimbursable from your employer, but not expensable on your tax return. If you are having trouble getting reimbursements from your employer, you may want to consider becoming self-employed and ask to get paid on a contract basis, this way you pay your own taxes but can also claim expenses. Depending on your employer and your personal level of business knowledge, it may be simple or tedious to go this route, but usually results in some tax savings.

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