How do I do my taxes if I work for myself?

Self-employed individuals in Canada must report all income and can deduct business and home office expenses. If your sales are over $30,000 in a year, you must register for HST. Filing can be done electronically or via paper, with key forms including T2125. The filing deadline is typically April 30, but self-employed individuals have until June 15 to file. Deadline to pay taxes is April 30th for both individuals and self employed business.

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Written by Peyton Bieda on August 20, 2024

If you work for yourself in Canada, understanding how to manage your taxes is crucial. Here's a guide to help you navigate the process:

Understanding Your Tax Obligations

As a self-employed individual, you are responsible for reporting your income and expenses to the Canada Revenue Agency (CRA). This includes income from a business, profession, commission, farming, or fishing. You must report this income on lines 13499 to 14300 of your income tax return⁵.

Income Reporting

Self-Employment Income: Report all income earned from your business activities. This includes any income not reported on a T4 slip, such as commissions or income from online business activities¹ ⁵.

Expenses and Deductions

Business Expenses: You can deduct expenses incurred to earn your business income. This includes costs like office supplies, travel expenses, and advertising. Use Form T2125 to report your business income and expenses².

Home Office Expenses: If you work from home, you may be able to claim home office expenses. This requires completing Form T777 and keeping detailed records of your expenses⁴.

Filing Your Taxes

Choosing a Filing Method

You have several options for filing your taxes:

Electronic Filing: Use CRA-approved tax software to file your taxes electronically. This is a quick and efficient method, with processing times typically within two weeks³.

Paper Filing: If you prefer, you can complete and file a paper tax return. Keep in mind that processing times for paper returns are longer, usually around eight weeks³.

Authorize a Representative: You can authorize us to file your taxes on your behalf³.

Important Forms and Deadlines

Form T2125: This form is used to report your business income and expenses.

Filing Deadline: The deadline for filing your tax return is typically April 30th of each year. However, if you or your spouse or common-law partner is self-employed, you have until June 15th to file, but any taxes owed must still be paid by April 30th to avoid interest charges¹.

Additional Resources

CRA's My Account: Register for CRA's My Account to access your tax information online, including notices of assessment and reassessment¹.

CRA Support: If you have questions, you can contact the CRA's individual enquiries line for assistance. They offer extended hours and a callback service to help you get the information you need¹.

By understanding these key aspects of self-employment taxes in Canada, you can ensure that you meet your tax obligations and take advantage of available deductions and credits.

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