Going back to work - tax implications
Aug 21st 2019 | 1:19 am
#1
Thread Starter
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Joined: Dec 2008
Posts: 1,497
From: Winnipeg
Going back to work - tax implications
So, with the little one being in school full-time I am looking at the tax implications of me going back to work on a part-time basis.
Bearing in mind that it likely would be a entry level job to start @ $11.85 p/h, given the large career gap I have (and no Canadian experience or formal education).
I’m looking at the spousal amount tax credit and- unless I’m reading it all wrong - then they reduce the amount of tax credit my other half receives by the amount I earn dollar for dollar up to the maximum of $11,800.
I would need to drive about 30km round trip to get to the city and work, and either keep it to 6 hours a day, or pay for before and after care (which would cost almost as much as what I’m earning - and obviously I’m not going to get any subsidy for this because husband is earning too much)
If I factor in school holidays and in-service days we are talking about 6hrs a day for 42 weeks. So a gross yearly income of $14,931 less $11,800 = $ 3,131 I’m adding to the household income less any deductions.
I am now going to be earning less than $2.60 an hour (less travel expenses).
Bearing in mind that it likely would be a entry level job to start @ $11.85 p/h, given the large career gap I have (and no Canadian experience or formal education).
I’m looking at the spousal amount tax credit and- unless I’m reading it all wrong - then they reduce the amount of tax credit my other half receives by the amount I earn dollar for dollar up to the maximum of $11,800.
I would need to drive about 30km round trip to get to the city and work, and either keep it to 6 hours a day, or pay for before and after care (which would cost almost as much as what I’m earning - and obviously I’m not going to get any subsidy for this because husband is earning too much)
If I factor in school holidays and in-service days we are talking about 6hrs a day for 42 weeks. So a gross yearly income of $14,931 less $11,800 = $ 3,131 I’m adding to the household income less any deductions.
I am now going to be earning less than $2.60 an hour (less travel expenses).
Aug 21st 2019 | 2:36 am
#2
Lost in BE Cyberspace
Joined: Aug 2005
Posts: 13,402
From: South of Calgary
Re: Going back to work - tax implications
What is the question?
Don't forget, the amount you pay in childcare will also reduce your taxable income.
I don't understand why you believe your income will reduce by the $11,800. All that will happen is that the tax you don't pay at your marginal rate, will be offset by the tax your OH would have paid on that $11,800 at his marginal rate.
Are you hoping that your income will improve over time? Do you wish to work for reasons other than income?
Don't forget, the amount you pay in childcare will also reduce your taxable income.
I don't understand why you believe your income will reduce by the $11,800. All that will happen is that the tax you don't pay at your marginal rate, will be offset by the tax your OH would have paid on that $11,800 at his marginal rate.
Are you hoping that your income will improve over time? Do you wish to work for reasons other than income?
Last edited by Almost Canadian; Aug 21st 2019 at 2:39 am.
Aug 21st 2019 | 2:58 am
#3
Thread Starter
BE Forum Addict
Joined: Dec 2008
Posts: 1,497
From: Winnipeg
Re: Going back to work - tax implications
What is the question?
Don't forget, the amount you pay in childcare will also reduce your taxable income.
I don't understand why you believe your income will reduce by the $11,800. All that will happen is that the tax you don't pay at your marginal rate, will be offset by the tax your OH would have paid on that $11,800 at his marginal rate.
Are you hoping that your income will improve over time? Do you wish to work for reasons other than income?
Don't forget, the amount you pay in childcare will also reduce your taxable income.
I don't understand why you believe your income will reduce by the $11,800. All that will happen is that the tax you don't pay at your marginal rate, will be offset by the tax your OH would have paid on that $11,800 at his marginal rate.
Are you hoping that your income will improve over time? Do you wish to work for reasons other than income?
Therefore the amount I earn up to $11,800 is basically just added on to his tax bill.
It states ‘the amount you receive for the spousal amount is the difference between your spouses income and $11,800’
Only looking to earn a bit of extra cash, not ever been career driven.
Aug 21st 2019 | 3:13 am
#4
Lost in BE Cyberspace
Joined: Aug 2005
Posts: 13,402
From: South of Calgary
Re: Going back to work - tax implications
So I am reading it wrong then? It says it is a tax credit (not a deduction) that he receives - does that not mean that he owes $11,800 less tax when I have no income?
Therefore the amount I earn up to $11,800 is basically just added on to his tax bill.
It states ‘the amount you receive for the spousal amount is the difference between your spouses income and $11,800’
Only looking to earn a bit of extra cash, not ever been career driven.
Let's say he pays tax at a rate of 50%. The $11,800 that you don't use is used to reduce his taxable income by the same amount and he will save $5,900, if the $11,800 is applied to his income.
If you earn income, you will use the $11,800 to reduce the tax that you would have to pay. If your marginal rate is 15% (I have no idea what it is), you would save $1,770 in tax, which is $4,130 less than the tax he would have paid. However, you have also earned $14,931 so, all other things being equal, you will be $10,801 better off.
Whether it is worth it for you (financially and emotionally) is entirely a matter for you.
Aug 21st 2019 | 3:27 am
#5
Thread Starter
BE Forum Addict
Joined: Dec 2008
Posts: 1,497
From: Winnipeg
Re: Going back to work - tax implications
Ahh, I see, I thought that was how a tax deduction worked.
And this is why I leave all the accounting to somebody else.
And this is why I leave all the accounting to somebody else.
