When you file your taxes in April, you have to file taxes for the multiple incomes that fill your bank. If you don’t, you are at risk and that you will get a call from Canada Revenue Agency or CRA. CRA considers it your responsibility to file ALL the taxes, and if you don’t, be ready for fines and penalties.
With a single source of income earned from an employer, you just file T-1 General Income Tax Return Form. But, when you have multiple sources of income, things get little more complicated, but not so much so that you can’t figure out what needs to be done.
At the crux of it, apart from the T-1 General Income Tax Return Form, you also have to submit other forms. It all depends on the income source and type. Here are the basics.
Form T2125 – Small Business Owners and Self Employed
The Form T2125 is the Statement of Business or Professional Activities. It is used for business or professional income, which also includes self-employment commission sales. If you have a both business and professional income, you file two separate Form T2125 for each income source. Form T2125 also qualifies for freelancers.
T4036 – Landlord
The best part about earning income from a rental property is that you don’t have to do anything, any work that is; except you still have file the money earned as rental income.
T5, T3 and T5013 – Investor
Another great way to earn extra money without working hard is by letting your investment work for you. For this, you have to fill three forms, T5 – Statement of Investment Income, T3 - Statement of Trust Income Allocations and Designations, and T5013 Statement of Partnership Income.
T4037 – Capital Gains
You have capital gains when you sell capital property like security, stock, or property. Capital gains are the profits from making the sale. You have to file Form T4037.
You may get commissions as an employed or self-employed individual. If you are employed, then you have to report it on box 42 of your T4 slips. If you are self-employed, you mention it on Form T2125.
These are just of the forms that you have to file depending on your income source. You can find a bigger and more detailed list on CRA’s website. This is why you should starting preparing to file your tax returns in advance. At first, it may seem complicated, but it is not. You can also take the help of various software applications that makes the job easier.
Netfile is an application built by CRA for the very purpose of filing taxes a bit easier.
- Turbo Tax
Turbo tax is software that allows you to file tax in an easier way. However, it is important that you know about the various tax rules while filing your tax return with this software because it is not as easy as it seems and a number of filers end up making mistakes.
TaxMan is a bit old, but it does the job well enough. The advantage is that the application is stupid proof. The disadvantage is that you have to print the tax form and mail it across to CRA.
The more you file your multiple returns, the less complex it becomes. If you start late, you risk missing the tax deadline because you are overwhelmed by the number of forms you have to fill and documents you have to get ready.
If you are in doubt, it is better to take consult from an accountant than risk making a mistake.