Question about multiple jobs and taxes
 

When doing taxes, is working one job at $30/hr and working 2 jobs that are $15/hr?
Or do u get taxes more for working 2 😊jobs right off the bat and then the tax bracket of both job?

your taxed on your total income. hopefully job 2 doesn't bump you up the tax bracket.

You probably will be over paying EI and CPP and will get that refunded back to you.

At the end of the year, the total amount of tax you will have to pay is exactly the same regardless of how many jobs you have and how much/little was deducted from you throughout the year. If you make 50k, you get taxed on 50k.

The part that most people don't understand is the Refund/Balance owing at the end of the tax return. This amount primarily depends on 3 things: your taxable income (from above), the tax credits available to you, and the amount of tax deducted from you throughout the year by your employer. If you end up owing money, typically it is because your income increased and/or your employer did not deduct enough taxes. If you end up getting a refund, typically it is because your income decreased and/or your employer deducted too much taxes.

Why does this matter? Because the amount of tax deducted from you per paycheck is based on primarily two things:
1). what you employer thinks you will earn in the year
2). what information you provide to them about your yearly income and tax credits (this is usually done through the TD1 and TD1BC forms you submit to your employer when you first begin working for them)

If you have more than 1 employer and they each think you ONLY work for them, then it is VERY likely that there is too little tax deducted from you throughout the year. As a result, when you go do your taxes, it is also likely you end up with a larger amount outstanding or a smaller refund than you're used to seeing. Although this makes it SEEM like you owe more tax, in reality, you are paying the exact same amount of tax for the year.

So what you are saying is that tax return I get every year was really my own money!?:troll:

EDIT:

Seriously though his explanation is spot on. Tax is a percentage of your total income throughout the year, this is across all different sources. If you work 2 months a year and make 300K in that period your tax rate will be horrifically high because the gov't will assume you are going to work through the entire year at that rate. So they take an average and tax you incrementally as if you are going to make 1.8mil that year. That means that once it comes to your tax return time you get the difference back between the tax rate you were charged as if you were making 1.8mil and your actual income of 300K.

So the best thing is let both both/all employer to deduct more taxes per pay? Or as u said it doesnt matter since the taxable income is still the same..

it is up to you on how you want to handle it. if you get one or both employers to deduct more tax, you will get a refund if you end up paying too much, or you will have to pay a lesser amount if you still haven't paid enough.

although its not a linear calculation, i find the this to be a good starting point: if you are owing, take that amount and divide it by 12. take that number and divide it by 2. then take that final number and request ONE of your employers to take that much more taxes off per pay period. trial and error.

some people think its stupid to do that, but thats what i did and it works for me. like i said, if you pay too much, you get a refund back. if the refund is ridiculous high, then decrease the amount taken off per pay period.

or alternatively, you can buy more RRSP as well. but depending how much you owe, you might have to buy a big chunk just to reduce the balance owing just by a tad bit.

just my 2c

I would check to see how you filled out your TD1 and TD1BC you are only supposed to claim the basic amount at one job usually you do this at the job where you will be getting paid more throughout the year.

For the other jobs you would claim 0 on the TD1BC and 0 on the TD1 also you would check the box on the back of the TD1 form under "More than one employer or payer at the same time"

:suspicious:

the easiest way is to make sure each of your employers are deducting 20% from each chq if you dont want to fiddle with TD1 forms.

50k @ .2 = 10k

job 1 -- 30k @ .2 = 6k [lowest tax bracket provincially]
job 2 -- 20k @.2 = 4k [ +20k second lowest tax bracket provincially]

just make sure at the end your total income from both jobs, x .20 = the amount of tax that is remitted by both employers.

@ radioman - see above for how you can be bumped up into the next tax bracket by having a second job.

All that matters at the end of the day is his annual income.

If he makes 20k more from his second job only a portion will be taxed higher then the rest. There isn't really a "bump".

Am I missing something here? I think we're lost in translation.

In an ideal world, the amount of tax withheld/deducted from you throughout the year would be EXACTLY equal to the amount of tax you would pay on the income you earned in the year. This would result in a $0 balance, neither a refund or an amount outstanding. To get it to that point is difficult, because we do our tax returns (to find out how much money we actually need to pay) after the year is over, but our tax is deducted/withheld per paycheck throughout the year before we actually know how much we'd owe. As a result, the only thing we can do (or your employer can do) is to gauge/estimate the numbers.

Does this mean you automatically need to ask your employers to deduct more taxes? Possibly, but not necessarily. This entirely depends on how your year's worth of income works out, how much tax credits you can claim, whether you have any deductions to claim. RRSPs? Tuition? Capital gains? There are so many things that can affect your tax return, it would be difficult for someone who knows nothing about you to say "do this and it will solve your problem".

There were suggestions from others, like "take amount owing from last year divide by 12, divide by 2" or "make sure each paycheck has at least 20% tax deducted". While they are valid recommendations, they may not be the perfect solution for everyone. For example, the first suggestion could work, but is suited for people in situations where everything looks the same year after year. If your income fluctuates from year to year, your hours worked change each week, your employers are different each year, then this won't work out. The second suggestion could work as well, but depending on how much tax credits you can claim and deductions you have for the year, 20% might end up being way too much. Or if your income pushes you into a higher tax bracket, 20% might end up being way too little.

you could have 10 people all making 50k and end up with 10 different tax returns.

Having said all of that, whether you want to increase your tax deductions at source is entirely up to you. Assuming you will owe, if you are capable of managing your own finances, it might not matter to you whether you owe a couple hundred at the end of the year. If you're worried you won't have that much to pay in one go, then by all means increase your deductions per paycheck. At the end of the year it's all the same (just make sure you have the money ready).

I mentioned before that IF your employers both think you ONLY work for them, it is LIKELY too little tax is being deducted from you, but there is still the possibility that everything is okay as it is. What if you have so much tax credits and deductions relative to your income, that you are already paying enough tax as is? Then you dont need to do anything. The trick is figuring out whether this is true for you or not.

yup, thats what i did. i asked my employer to take about $80 off per pay cheque for taxes and so far its been working quite well. get a decent sized refund now.

You are right, 37k of the 50k will be at the lowest bracket and the remainder will be at the next bracket. We were lost in translation indeed :)

Cool beans :)

It bothers me when people say "hope it doesn't bump you into the next tax bracket" because they're basically saying "Hope you don't make more money".

:suspicious:

Don't forget buying RRSP and if you donate money (have to be at least a certain amount), part time class it give more credit so you might end up getting money back.

Canadian income tax rates for Individuals
5.06% on the first $37,606 of taxable income, +
7.7% on the next $37,607, +
10.5% on the next $11,141, +
12.29% on the next $18,504, +
14.7% on the next $45,142, +
16.8% on the amount over $150,000


Yea I hear people say this.. if your going to work more hours, make enough so you just under the next tax bracket but not over it..
so on your next $37k, it wont matter if you make $10k or $37k, you still get taxed 7.7%...

kinda seems unfair that someone that makes 149,999.99 pays the same tax as someone that makes 45,142.00 ......

shouldn't the scales be a lot finer?
like exact percentages for every 100 or 1000 dollar increase?

you looking at it wrong... that chart I posted indicates if you make $37k, you get taxed 5%.. then if you make $74k, the first $37k is still taxed at 5% while the next $37k is taxed at 7.7%...

so when you hit the 14.7%, your actually making 130k+

the first part is correct, but when you hit 14.7%, you'd actually be at $105k.