jericho

I earn $70k a year. Wifey doesnt work and we have two kids (3 and nearly 2).
No other income etc.
Roughly, how much should I be paying.

I earn $2931.25 bi weekly (gross) but am only coming out with $2143.
Seems like a lot to me, and I've just noticed it changes each month too.
Last month I came out just over $2000.

Tangram

Sounds right. I am just under that gross and after Comp Pension etc etc i end up with $1800 bi weekly

danfolkestone

I think that it's right but you will be entitled to a rebate when you submit your tax return. I earn about the same and pay about the same amount of tax. However, I understand that you will be able to offet your wife's tax-free allowance against your income, since she is not earning. I haven't completely got my head around tax here yet though, so I may have misunderstood!

iaink

If you didnt tell them your wife doenst work they will be taxing for the default deduction amounts. You will get a refund when you file. HR can give you a form to be taxed more accurately at source.

New year has rolled around, so its time once more to start paying into CPP and EI again. Come August? it will max out for the year and your take home will go up a couple of hundred again.

Aviator

No, you cannot use a partners tax threshold as they are not earning, however you can get a tax allowance for being married (got to be some compensation eh!). If you earn interest in a joint account an accountant can allocate that for you between partners. There is also child tax credits, which are based on family income.

A tax rebate is not a certainty, don't rely on it, it depends on circumstances. If you have investment income, you may end up owing tax. Tax rebates are not a good thing, all they mean is you gave the government a free loan for the year.

Atlantic Xpat

^^^^ Important point for Newbies to note. And bloody irritating. You get used to the extra income and then it disappears just after Christmas!

iaink

Yeah, and then you are given the merry news that you wont be getting the customary inflationary pay rise that traditionally fills the shortfall this year because of the state of the global economy:curse:

Auld Yin

You are the one who dictates how much tax is deducted at source. When you began working in Canada your employer should have had you complete a tax form (can't remember the number) which describes how much tax you want deducted, subject of course to the minimum. Some people purposely have tax deducted as if a single person, then are assured of a refund when they file an ITR and claim dependents. You can set the form up on the basis of having a spouse and two children. I have always found that the tax deducted under the Canadian system is quite accurate assuming no garbage in.

danfolkestone

I quite agree that they amount to a free loan, so aren't a particularly good investment - although better than many alternatives in the current environment! I'm not expecting any rebate personally, I was referring to the OP's specific situation.

The OP is earning approximately the same as me and paying about the same tax as me. However, he has a wife with no income and dependant children (neither of which apply to me). From what I can see on the tax form, he should be paying less tax, as he can make deductions for his children and non-earning wife using boxes 3 and 5. http://www.cra-arc.gc.ca/E/pbg/tf/50...000-s1-08e.pdf

I'm still trying to understand the forms properly though, so can you (or someone else) please explain why box 3 doesn't amount to using your non-earning partner's tax threshold?

Steve_P

TD1
http://www.cra-arc.gc.ca/E/pbg/tf/td1/td1-09e.pdf

iaink

On the other hand with two kids under 4 he might be getting $2400 a year in universal tax benefit, which will be taxed at whatever the marginal rate at $70k a year is (about 40%?, so nearly a grand) so its probaby a good idea to over pay tax over the year than to come up short in march and have to find the extra money owing....

I am married with two kids, but prefer to pay at source as single in order to ensure I get a rebate which I can reinvest in RRSPs to boost the following years rebate and save for retirement in some little way.

iaink

Its similar, but unless its changed recently the married allowance does not equal twice the single allowance. For reasons that escape me and piss me off every tax season.

danfolkestone

Thanks for clearing that up. I don't know about earlier years, but the forms for 2008 show exactly the same figures for both personal allowance and spouse allowance, for both federal and provincial tax in Alberta. Maybe it's different in other provinces though.

Steve_P

According to the TD1 linked in my post above Item 7: Spouse or Common-law partner amount: is exactly the same as your personal amount ($10,100 this year) as long as she has absolutely no income.

Any income she does earn has to be deducted from this amount.

jericho

Thanks to all.