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Originally posted by Sid Meier:
lol, taxes? What are taxes? The boss just takes hte money out of the cash and hands it over, though I think he gave me extra though...

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Well, unless you want to be in violation of the law, YOU will pay taxes on it.

So carefully record what you are paid, and set some of it aside each time to pay taxes at the end of the year.
 

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Posted by Sid Meier (Member # 6965) on :
 
lol, I need 300$ to pay for 12 months of internet service if I move out, cuz since I go to college otherwise I'ld need 70$ a month for train tickets so I'm thinking moving out would be more economical (to my grandparents that is they live near John Abbott College) and would put me a position to visit some of ym friends, Tyler in Dorion, Christohper in St Annes, Tiffany in St Anne, Mike in Pancoor and with Pancoor being an english speaking town I can get a part time job easier during school year.
 

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Posted by Sid Meier (Member # 6965) on :
 
I live with my parents does that mean I have to pay taxes? its a part time job...
 

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Posted by katharina (Member # 827) on :
 
Yes, you have to pay taxes on all income, whether or not you live with your parents.
 

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Posted by Sid Meier (Member # 6965) on :
 
i see... what happens if I speand it all before the year ends?
 

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Posted by El JT de Spang (Member # 7742) on :
 
You won't though, because you'll earn way below the poverty line this year.

So essentially you'll keep track of your earnings, and at the end of the year you'll pay nothing.
 

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Posted by rivka (Member # 4859) on :
 
Then you owe the government money. Not the best position to be in.

And actually, you owe the government MORE taxes if you are your parents' dependent than if you were not. (Of course, you could be a dependent even if you didn't live at home.)



JT, I suspect he will not owe much. But it is unlikely he will owe nothing, since he is a dependent. I remember paying taxes when I was in high school, and my babysitting and tutoring money. I didn't owe a lot, but far from nothing.
 

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Posted by Bokonon (Member # 480) on :
 
You would owe your local, state, and federal revenue departments taxes on it. You are getting taxed on income, not on savings, so spending it all doesn't free you from your tax obligation.

-Bok
 

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Posted by Dagonee (Member # 5818) on :
 
Your boss is likely in violation of quite a few laws. Worse, he might be treating you as a contract employee, which means you'll be on the hook for double FICA and Medicare contributions. He could report what he's paid you to the IRS and they'll come after you for 15% payroll taxes plus income tax. Get this resolved now, one way or the other.

The alternative is unpretty.
 

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Posted by advice for robots (Member # 2544) on :
 
They come after ya. The IRS guy shows up at your door, and he's got his goons with him.

I remember my first paycheck. I don't think it was even over $100, but I thought I was the richest guy in the world. I felt independent and it was thrilling.
 

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Posted by Sid Meier (Member # 6965) on :
 
lol, umm I live in GASP* Canada, we don't have the IRS here. We have revenue Canada, I'll ask my mom about it she didn't say anything about taxes.
 

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Posted by Jhai (Member # 5633) on :
 
It's very, very unlikely he'll have to pay any taxes. Stop frightening him.

Even if he's a dependent, he'll have to earn more than $4850 this year in order to have to pay ANY federal taxes. State and local taxes, in my experience, tend to have even larger amounts that you need to be over in order to have to pay taxes.

He probably won't even have to file.

I know all this because my dad claimed me as a dependent before first talking to me about it, despite the fact that I'm not really dependent on him in any way. That meant I had to file and pay almost $400 in taxes - I would have been just under the line otherwise. I made him pay me back the money, since I'm sure he made more than $400 from claiming me.

edited:
oops- sorry sid, I didn't realize you live in Canada. My numbers are off, then, but your governement probably has a similar set up.
 

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Posted by Sid Meier (Member # 6965) on :
 
okay, i think its assumed that the restaurant pays my taxes since it was paid straight from the cash instead of some kind of check. Speaking of which I need a bank account now I thinks.
 

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Posted by advice for robots (Member # 2544) on :
 
Ah so.

That means they pay you with that silly Canadian money. :)
 

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Posted by rivka (Member # 4859) on :
 
Sid, if they were paying your taxes, you would have received a check. The stub would show exactly what taxes they paid.

At least, I'm fairly certain it works that way in Canada as well . . .
 

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Posted by Jhai (Member # 5633) on :
 
Actually, I've worked at a restaurant that did this exact under-the-table deal. Most of the workers are college students who can only come in for a shift or two a week, and often send in a substitute. The manager will pay out $7 an hour at the end of the shift right out of the till.

I have no idea how, exactly, they cook their books, but it'd be interesting to see. I know they have a core group on the payroll...

Anyways, I don't feel bad about not paying taxes on the petty cash I get from that job. It's the only thing that allows me to eat, some weeks, which allows me to stay in college. I'll most likely earn more and do more for the community in the long run if I get my degree than if I have to drop out from lack of funds.
 

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Posted by Sean (Member # 689) on :
 
You need to make more than 8,000 to be on the hook for income tax. Your employer should technically probably be deducting Employment Insurance premiums, as well as possibly Canada Pensions Plan payments, but I wouldn't worry about it*. It's potentially a future problem for them, but I can't see anyone coming after you about it.

If you make a significant amount of money it's not a bad idea to file a tax return anyway since you can carry over the RRSP room for future use. Also if you check the "apply for GST rebate" box it's possible they'll occasionally send you random amounts of money for some reason I don't understand. Worked for me.

* In case my vagueness doesn't make that clear, I'm not a lawyer / accountant / whatever.
 

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Posted by Sid Meier (Member # 6965) on :
 
okay since they pay me from the cash it means they don't have to pay tax and neither do I so we're both technically screwing the government.

YAY!
 

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Posted by Sean (Member # 689) on :
 


That viewpoint makes this a lot simpler, sure.
 

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Posted by Book (Member # 5500) on :
 
This is deeply strange. I got my first paycheck yesterday, too. Hmmm....
 

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Posted by Sid Meier (Member # 6965) on :
 
maybe we're *GASP* having a coikidink.
 

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Posted by Katarain (Member # 6659) on :
 
That's not how you spell it.
 

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Posted by Dagonee (Member # 5818) on :
 

quote:

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Even if he's a dependent, he'll have to earn more than $4850 this year in order to have to pay ANY federal taxes. State and local taxes, in my experience, tend to have even larger amounts that you need to be over in order to have to pay taxes.

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I have no idea how this applies in Canada, but this statement is flat wrong. You owe SS and Medicare (both federal taxes) on every wage dollar you earn up to a certain amount. Your employer owes an identical amount. If your employer doesn't pay it, they might be able to come after you if they can make a case you were an independent contractor.
 

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Posted by Katarain (Member # 6659) on :
 
Yup. And it sucks, too. That ate up most of our Earned Income Credit last year. *Sigh*

-Katarain
 

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Posted by Sid Meier (Member # 6965) on :
 
well at least I don't have to pay the House of Commons a dime of what I make
 

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Posted by ElJay (Member # 6358) on :
 
It's that you choose not to, Sid, not that you don't have to. Legally, you do have to. You and your employer are choosing to break the law. No, you will probably not get caught or face any consequences for your actions, but please be aware that this is something you are choosing to do, and that it is illegal.
 

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Posted by Chungwa (Member # 6421) on :
 
This summer I made about $3500 CAD - all my income came in cash and I didn't pay taxes on it.

Obviously, at the end of the year I should claim this money as income and pay "some" taxes. I wont have to pay any realy Federal or Provincial taxes, since I wont have made enough money - but I will have to pay some other small taxes.

I'm not actually going to fill out my Canadian tax form, though, since I'll be living the rest of the year in Illinois (and I wont be telling Illinois about working in Canada, since they'll get silly about it and try to have my school charge me out of state tuition next year).

I know it will be in violation of the law (you have to claim all income earned per year), but I'm not too worried about it. Granted, I usually don't work for cash, but the job I have right now was too good to pass up because of that.
 

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Posted by Dagonee (Member # 5818) on :
 
By the way, if the employer isn't reporting your pay, you can be sure he's not reporting the money he received for the job. Because otherwise it would be in his benefit to report it (because he could deduct it).

So either the employer is going to report it as payments to a contractor and leave you on the hook for it, or he's ripping off the government for a lot of money.
 

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Posted by Jhai (Member # 5633) on :
 

quote:

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Originally posted by Dagonee:

quote:

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Even if he's a dependent, he'll have to earn more than $4850 this year in order to have to pay ANY federal taxes. State and local taxes, in my experience, tend to have even larger amounts that you need to be over in order to have to pay taxes.

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I have no idea how this applies in Canada, but this statement is flat wrong. You owe SS and Medicare (both federal taxes) on every wage dollar you earn up to a certain amount. Your employer owes an identical amount. If your employer doesn't pay it, they might be able to come after you if they can make a case you were an independent contractor.

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No, it's not. Look at the 1040EZ form he'd be filling out if he were an American citizen:
http://www.irs.gov/pub/irs-pdf/f1040ez.pdf

Say you make $1000 in a year. That's $1000 on line 1. To make things simple, you have no taxable income and no unemployment or Alaskan whatever. So blanks on line 2 & 3. Line 4 is therefore $1000.

You're being claimed as a dependent, so you go to the worksheet on the back (or scroll down in the PDF). You'll have $1000 on line C, and on line E. You're not married, so you enter 0 on line F, and have $1000 again on line G.

Back up to the main form. On line 6 you'll have 0. This line is your TAXABLE INCOME.

You've made no payments or taxes so far this year, so lines 7, 8a, 8b, and 9 are blank. Line 10 tells you to look in the booklet to figure out how much taxes you owe, but I'm pretty sure if your taxable income is 0, then you aren't going to be ownin' anything.

There won't be a refund, since you never paid any medicare or social security. You'll have a nice 0 at line 12, which as it say in bold is the amount you owe.


 

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Posted by Dagonee (Member # 5818) on :
 
Social Security and Medicare aren't included on IRS personal tax forms, although self-employment tax (which is the equivalent of employer match on those taxes) is included on other 1040 forms.

If you earned wages and haven't had FICA and Medicare withheld, then someone has broken the law.
 

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Posted by socal_chic (Member # 7803) on :
 
Sid, for what my opinion's worth, I don't think you need to worry about it. You have to make a certain amount of money before taxes kick in anyway. BTW, I got my first paycheck about a week ago! Congrats on yours.
 

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Posted by Jhai (Member # 5633) on :
 
I don't know for sure, Dagonee. This is just what my step-sister, who's an accountant has told me regarding taxes (although she doesn't do much tax stuff for individuals, except for family). It's also what I figured as I did my taxes last year. You may be right, though.
 

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Posted by Sid Meier (Member # 6965) on :
 
*bows* thanks y'all.
 

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Posted by quidscribis (Member # 5124) on :
 
In Canada, if you earn less than $8012 , you don't owe taxes period. That's the basic personal tax credit amount. If you earn more than that, you might still not have to pay tax depending on what other tax credits apply to you, but you'd have to calculate that. You are not required to file an income tax return if you do not owe taxes unless you're requested to by the government, or you sold property, or a few other reasons that you can read about here.

There are other benefits (depending on your point of view) to filing taxes even if you don't owe - such as getting the GST/HST cheque.

Now. As for this whole notion that, just because you're paid under the table you automatically don't owe taxes - that's bull. If the employer is deducting taxes, the employer is required to have the employee fill out a TD(1), which indicates the level of taxes to be deducted from each paycheque. The employer is further obligated by law to provide you with a slip each pay period detailing what taxes and other deductions have been taken out of your pay. At the end of the year, the employer is required to issue to each employee a T4, a summary of yearly earnings and deductions. To not do that is in violation of the law.

Casual labour, however is permissable to be paid by cash - provided the person providing the casual labour earns less than $500 per year. Anything over that amount must be treated as an employee/employer relationship.

Subcontractor or other business relationship are different and have to be dealt with in very specific ways. And no, an employee cannot legally decide they want to be a subcontractor to get out of paying taxes. There is a huge difference in the business relationship between subcontractors and employees. But we're not going into all that today.

Now. If the employer is not deducting taxes even though you've earned over $500 per year, then that employer is running his business contrary to the laws in Canada. Yes, Canada Revenue Agency will find out. Yes, CRA can and will do a payroll audit, although it's likely that the discrepancies will initially be caught through a corporate income tax audit, followed up by a payroll audit. From what you're describing, the owner of the business is very likely NOT reporting all his income. When a payroll audit is done, the employer has two choices - he can either provide the names of all his employees, so that CRA can go after the employees for the taxes and other contributions, or the employer can cough up the taxes and other contributions out of their own pocket.

Guess which way it always goes?

If you're earning less than the $8012, then you have nothing to worry about. BUT remember that you do have to include tips in your earnings. Tips are taxable. I would caution you to record all your earnings, even if you never intend to file a tax return. It's much easier now than later, and if/when a payroll audit is done and the CRA gets your name and comes after you, if you've recorded your earnings now, it'll go much easier on you.

Now then. Chungwa. Canadian income tax laws require that you include ALL your worldwide income in your calculations. If you've earned over the basic personal exemption amount, you may still owe. That you're earning the second part in the US does NOT exempt you in any way.

And for the record, I have participated in income tax, payroll, and GST audits, and I have seen them get messy.
 

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Posted by Sid Meier (Member # 6965) on :
 
hmm? I'm only working for another 2-3 weekends then school starts, I'll definatly earn less then 8000$. However I don't get tips, I wash dishes and clean up the mess.
 

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Posted by Chungwa (Member # 6421) on :
 
quidscribis, I thought I made it pretty clear in my post that I was aware of that.

I simply meant that while the law requires me to report the income, I am not actually going to report it. Yes, I am not following the law.

My reasoning: the taxes I would pay, if any, would be minimal (at this time I don't actually make over the basic exemption amount). Basically, I do not feel it is worth the effort (I already have to fill out a 1040, so I'll "screw" -as that seems to be the popular term - the Canadian government out of my summer work).

I'm not arguing that what I am doing is law abiding. But I also don't think it's going to become an issue.

Oh, and quidscribis, since you know a lot about Canadian tax law, would I still be required to fill out a Canadian tax form if I am living, completely, in a different country? (Please note that this is for my curiosity. Regardless of what the law is I will not be filling out a Canadian tax return and a US tax return while I live in the US).
 

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Posted by quidscribis (Member # 5124) on :
 
Depends on whether or not you are considered a resident of Canada. Living in another country does not preclude the possibility that you are still considered as a resident of Canada according to Canadian income tax laws. Here's CRA's website on residency ties.

In order to be considered not a resident, you'd have to live outside Canda at least 183 days of the year permanently (as in, a 2 year contract taking you out of the country with plans to return to Canada at the end of the contract doesn't count), plus sever all ties. No property, no bank accounts, no telephone or other utilities in your name, nothing. If this is something you would like to do, you could see an emigration lawyer to make sure you do it properly or go through the information on CRA's website and fill out their form to make it all official and nice.

Chungwa, I'm merely providing information. What you do with it is your choice. And for the record, as I stated in my previous post, you're not required to file an income tax return in Canada unless you owe income tax, CRA requests you to, or a bunch of other reasons you can read about on the link I provided above. It's entirely possible that you may not be legally required to file a Canadian income tax return this year. But then, that's up to you to figure out.
 

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Posted by quidscribis (Member # 5124) on :
 
Sid, if you'll definitely earn less than the $8012, then you don't need to worry about filing taxes. However, I would still advise you to record all money you receive in the event that CRA does a payroll audit and tries to come after you for taxes. If you record the dates and amounts received now, it'll certainly go much better for you if/when CRA approaches you.
 

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Posted by Chungwa (Member # 6421) on :
 
Okay, thanks a lot quidscribis.

I am sorry if my post came off as defensive. I hadn't intended it to. I really do appreciate the information.

And, it seems I am not considered a Canadian resident, then, as I've only been in Canada for about 70 days a year for the last three years.

As an side note, I have just been approved for a Canadian student loan - while filling out the form I gave permission for the loan department (of the government) to look at my Canadian tax returns - as I didn't file one and still got approved for a loan, I figure that means I've been doing alright.
 

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Posted by Dagonee (Member # 5818) on :
 

quote:

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I don't know for sure, Dagonee. This is just what my step-sister, who's an accountant has told me regarding taxes (although she doesn't do much tax stuff for individuals, except for family). It's also what I figured as I did my taxes last year. You may be right, though.

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As you did taxes, you probably didn't do anything with FICA or Medicare. It's taken out of your paycheck each time and there's no return for it.
 

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Posted by quidscribis (Member # 5124) on :
 
Chungwa - no problem. Um, just because you've lived in Canada for only 70 days out of the last three years is actually not sufficient. You have to have ALL other ties severed, including, but not limited to, bank accounts, investments, properties, provincial health care, private health insurance, everything. And having Canadian student loans may qualify you for having ties to Canada. I wouldn't assume, and getting approved for a loan is a separate process from income taxes. Again, I would make no assumptions. Good luck either way.
 

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Posted by Chungwa (Member # 6421) on :
 
Yes, I reread your other post and see that now (apparently I just jumped over the "sever all ties" part).

I would think that the student loan probably does mean I have ties to Canada. At any rate, at this point I'm not too concerned. Mainly because I make very little (financial aid - US and Canadian support me for most of the year). My actual, taxable income will probably not be over $4000 this coming year - well, $6000 with the summer work. I would assume that I would owe something on that, even if what I owe is a very small amount. My main issue is paying both the Canadian and the US government tax on identical income.
 

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Posted by quidscribis (Member # 5124) on :
 

quote:

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My main issue is paying both the Canadian and the US government tax on identical income.

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Uh, no.

If you're considered a Canadian resident for income tax purposes, then whatever income tax you pay in the US on your US income is reported on the Canadian income tax return as a tax credit, so even though you're including your US income (and, in fact, all world income), you're not being double taxed. You can find more information here.

It sounds to me as though you're undereducated as far as the Canadian tax system goes, which, actually, is pretty much the same as most Canadians. As someone who's border hopping, it would make sense for you to educate yourself on this so you can avoid making serious mistakes.

You can get a LOT of info about how the tax system works on the CRA website. I'd suggest you start reading.

As another comment, if I recall correctly, grants, scholarships, bursaries, etc. are considered income. Loans are not. More information here. Even more information here.
 

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Posted by Chungwa (Member # 6421) on :
 
Hm. I'm sure you're right about my ignorance.

Thanks for the link - I'll check it out. If it is as you say (and I have no reason to think it isn't) then it sounds like I will be filling out a Canadian tax return this year.

Thanks for the information, I do appreciate it.
 

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Posted by Chungwa (Member # 6421) on :
 
I've read up on Canadian tax law a little more now - thanks a lot quidscribis, I feel at least somewhat competent with it now.

And, I think it will be to my benefit to fill out both a US and Canadian tax return, at least for a few years still.

You have shown me truth.
 

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Posted by quidscribis (Member # 5124) on :
 
Thanks, Chungwa. Good luck!
 

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