Financial Literacy for Workers: Taxes Edition
Learn how to get the most out of your taxes as a worker!
Tax Credits give you an amount that is put onto your CRA account.
If you are ever owing come tax time, the credit amount can be used on your balance. They are either refundable or non-refundable. Refundable tax credits can be paid out to you on your income tax return, unlike non-refundable ones.
Your tax credits can also be transferred to other family members in specific circumstances should they need to use it.
Canada Workers Benefit
NEW! Canada Workers Benefit (open to Canadian working residents 19 or older, students may not qualify, self-employed/gig workers qualify!)
Up to $1,428 for individuals with a net income of $33,015 or less. (You get less of a credit after a net income of $23,495).
Up to $2,461 for families with combined family net incomes of $43, 212 or less. (You get less of a credit after a family net income of $26,805).
**There is an additional disability amount for individuals and their families if they have previously been approved for the Disability Tax Credit
Education Tax Credits
Non-refundable and refundable tax credits also exist for claiming tuition, including a separate one for upgrading and adult basic education! Also, the Canada Training Credit can refund some of the costs of professional testing fees, often found in trades apprenticeships. Each of these have specific criteria and some education tax credits are not available to self-employed people.
Claiming Stolen Wages
Did you know that you can deduct any legal fees that you paid for to fight for wages owed to you? This includes wages you have been awarded by a current or former employer. You cannot deduct legal fees if you do not end up winning back these wages. However, you still have to include any awarded wages in your total income that you are claiming.
You can find this on line 22900 of your return! You must complete a separate form for this, Form T777.
Where to File
- Accountants: typically cost $80 – $160+, fees vary
- Tax services like H&R Block, Liberty Tax (variety of costs and routes to file, can sometimes offer instant refund)
- Do it yourself via E-FILE (online, certified programs like TurboTax) or get a paper copy income tax booklet and mail it in
- Community Volunteer Income Tax Clinics (for low/modest income people)
- Authorize a representative, friend or family member, to file for you (they must have an online CRA My Account to generate consent forms, etc.)
- H&R Block (free for those under 25 years old)
Gig workers are considered self-employed people by the CRA and also claim their total income for the year. It is important to keep records of your earnings as well as your expenses. This is because you must register for GST/HST after $30, 000 of earnings.
Also, you should budget for income tax you will owe come tax season. A general guideline is 25% of what you earn. Gig workers can get tax deductions for their business expenses, such as mileage on their vehicles.
Keep all records and receipts to justify business vs. personal expenses if necessary to the CRA and to keep track for yourself! These expense claims will also require separate forms during your tax return if you file yourself or with someone else.
No Deductions On Paychecks
Sometimes employers do not take income tax and other federal deductions off of your paychecks even though they are legally required to. However, enforcing this or penalizing the Employer can become a legal battle in tax court that not every worker is able to take on.
Therefore, it is really important that workers who are 1) not seeing deductions on their paychecks or 2) not receiving a paycheck (just the money) keep very good records of how much money they are receiving and on what dates! Also, it is important that workers put some money aside (25% ideally) to pay the CRA at tax time. The CRA is friendlier to workers who can prove attempts to file their taxes correctly, should the CRA ever contact the worker or attempt to penalize the Employer.
At the end of the day, the CRA can make the Employer pay a percentage of what is owed as a penalty, but the worker is the one responsible for paying the entire income tax for that year on their own wages.