Are there tax implications of having multiple employers?
February 17, 2023
We get it – we sometimes need to juggle multiple jobs. Especially with inflation at a recent high, some people are making ends meet by working for more than one employer, or perhaps changing jobs throughout the year.
But by the end of February, all employers should have sent out T4 slips to employees, either in person, via mail or through a secured human resources site. So, if you find yourself with multiple T4 slips to manage this tax season, here’s what you need to know. (PS, check out our handy interactive T4 slip so you know what each line indicates!)
Two or more jobs.
If you have more than one job, your total income from everything you bring in is your income. So, adding up the total amounts earned, you might find yourself in a different tax bracket than you had been previously and therefore might owe more in taxes than in previous years.
All of your employers are deducting tax from your pay, however, the formula used to calculate these amounts includes the basic personal amount, which is the minimum amount of money a Canadian can earn before they start paying income taxes. It’s now set at $15,000. But, both employers will assume to include the basic personal amount in their calculations unless you tell one of them that the basic personal amount has been accounted for from your other employer. If not, there will be $15,000 of income that should have been taxed that wasn’t, and this can mean a shocking tax bill. When you start a new job, you’re given a Form TD1 Personal Tax Credits Return (federal and provincial), and on this form you need to indicate to your second (and so forth) employer(s) that you can’t claim the basic personal amount on this pay.
If you’re working in more than one province, familiarize yourself with the credits and benefits you’re entitled to and account for these when you fill out your Form TD1 to ensure you’re not “double dipping” on credits, to avoid that big bill come tax time.
If side hustles are in the income mix.
If you have a mix of T4s from employers as well as income from your own side hustle, you’ll need to report all that income. You won’t receive a T4 from most side hustles because in essence, you’ll be your own employer. However, if you’re working for a company like Uber or SkipTheDishes, they will provide you with an annual statement you can use to support your tax filing. Unlike a T4, they aren’t sharing this with the government.
It’s also important to know what you can claim as a business expense. For example, if you drive for Uber, you might be able to claim your gas used for driving purposes, car washes, installing winter tires and other car maintenance (usually as a percentage of kilometers on the car of personal use vs. business use).
To file as a self-employed individual, you’re going to fill out the Statement of Business or Professional Activities – forms T2125 and TP-80. Remember, there is no tax withheld from those earnings, so throughout the year you should be setting aside the appropriate amount of funds to cover your taxes that you’re likely to owe. If you have more than $3,000 of tax owing at the end of the year, you will be required to pay instalments towards the next year.
Self employed also have until June 15 to file their taxes, but if you owe, that money is due on May 1, 2023.
If you’re working for cash or tips and therefore not getting a T4, you still need to claim that income on your taxes.
Line 10400 “Employment income not reported on a T4 slip” is the spot where you inform the government about how much you earned in cash or non-reported payments. In Quebec, workers declare their tips at the end of each pay period by giving their employer form TP-1019.4.V Register and Statement of Tips. For those not in Quebec, it’s probably best to keep a tally, spreadsheet or tracker of tips earned daily or biweekly so you have the most accurate representation of what you earned.
Although the government won’t have a record of cash tips (except in the case where an employer adds mandatory service charges to clients bills – then this money will appear on your T4 slip) – they have an idea of how much you should make based on hours, industry and location, so it’s best to be as accurate as possible, and save your tracker for 6 years in case you receive a Notice of Assessment.
If you have any questions about when and how to file your taxes, H&R Block Tax Experts are here to help! Find an office near you to book an appointment today.