Freelancers, independent contractors, or gig workers are like business owners. Because you won't get a T4 slip reporting income for the year, you'll have to calculate how much income you made and include it on your federal tax return. You need not worry, though! We'll make it as easy as possible. Whatever you do to make extra money, whether you deliver groceries through Instacart or you're an Uber driver, here are the things you'll need to know when it comes to filing your taxes as a gig worker in Oakville.
Do These Methods Apply To You?
The Canada Revenue Agency (CRA) considers anything you do to make a profit as a "business.” Business income must be reported on your return. Among these are:
- Offering services, such as dog-walking or selling homemade candles on Etsy;
- Run errands occasionally through platforms such as TaskRabbit or food delivery apps such as SkipTheDishes and Uber Eats for extra income;
- A website or platform that enables you to rent out your home or cottage; and
- You are engaging in freelance work as an accountant, digital marketer or artist.
Keep Your Records Handy
Knowing what you earn (and spend) is vital because you're running your own business. Organize your documents into folders and file them by date. Whenever possible, make copies of invoices you've sent to clients and receipts for expenses you incurred working (for instance, gas costs or supplies). If CRA selects your return for a detailed review, they can request to see all your documents for at least six years.
Report your Income Even if You Earn Cash
In any case, the Statement of business or professional activities must be used to report gig work income on your return. Failure to report your gig income can result in severe penalties.You may still want to report what you've earned on your return. This is true whether your total income is higher than your basic personal amount or not. For example, the GST/HST Credit and Canada Child Benefit CRA need this information to determine your eligibility. If you don’t include your total income, you could miss out on these benefits.
Save on taxes
Are you aware that you may be able to reduce your taxes owing by claiming your work-related expenses? You could deduct the expenses from your taxes depending on the type of gig you have.You might have to spend money on vehicle maintenance (like replacing brake fluid or installing winter tires) and purchasing supplies for your passengers (such as water or snacks). Similarly, if you rent your home and must provide toilet paper to guests or pay for a cleaning service after guests leave, you may also be able to deduct these costs.
While side gigs may provide some extra income, they can also complicate your tax situation. That’s why you need highly qualified tax experts. For further information, please contact us, and we will help you out any way we can.