Who Should File Income Tax Return in Canada? (2024)

FAQs

Who Should File Income Tax Return in Canada? ›

You must file a return if: You owe income tax to the government (e.g., you earn significant income in Canada). You're asked by the CRA to file a return.

You must file a return if: You owe income tax to the government (e.g., you earn significant income in Canada). You're asked by the CRA to file a return.

You have to file a return if you are a resident of Canada for tax purposes and you owe tax or want to receive a refund.

1. You owe tax or want to receive a refund. If you are a resident of Canada for part or all of a tax year, you must file a tax return if you owe tax or want to receive a refund. If you owe tax, you should file on time to avoid late fees.

In a normal year, the deadline for most Canadians to file their taxes is April 30 — but this year, that date falls on a Sunday. As a result, you'll have until May 1, 2023, to file your 2022 tax return. There's a later deadline of June 15, 2023, for those with self-employment income to report.

You should file a tax return before the April 30 deadline after the end of the tax year. You'll need your social insurance number and T4 or final payslip to file. While the deadline is April 30, you can file your tax return in February after the end of the tax year.

As a U.S. citizen working and living in Canada, yes, you may also have to file Canadian taxes: Canadian tax residents are taxed on all income, regardless of where it's earned.

Canadian expats that hold a Green Card or meet the Substantial Presence Test are considered U.S. Resident Aliens by the IRS. For resident aliens, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same as for U.S. citizens.

Yes, if you are a citizen or resident alien of the United States, you have a U.S. tax obligation, even if you're a dual citizen of the U.S. and Canada. The U.S. is one of two countries in the world that taxes based on citizenship, not place of residency.

What happens if you don't file income tax in Canada? ›

According to the CRA, the penalty for filing a tax return after the due date while there is a balance owing is five per cent of your 2022 balance owing, plus an additional one per cent each full month after the due date before you file, up to a maximum of 12 months.

How does a tax refund work in Canada? Whenever the Canada Revenue Agency (CRA) collects more income tax from you than you owe, you'll receive the excess amount back as a refund. Think of it as extra money you didn't know you had just like the $20 bill you found in last year's winter coat!

Tax-free basic personal amounts

For the 2022 tax year, the federal basic personal amount is $14,398 (for taxpayers with a net income of $155,625 or less). This means that an individual Canadian taxpayer can earn up-to $14,398 in 2022 before paying any federal income tax.

Most U.S. citizens – and permanent residents who work in the United States – need to file a tax return if they make more than a certain amount for the year. You may want to file even if you make less than that amount, because you may get money back if you file.

For instance, low-income families may qualify for the Earned Income Tax Credit (EITC) federally, and the California EITC on their state tax return. This can pay anywhere from $275 to $6,935. So as long as you earned income, there is no minimum to file taxes in California.

Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher. If you're married filing jointly and both 65 or older, that amount is $28,700. If you're married filing jointly and only one of you is 65 or older, that amount is $27,300.

The tax rates in Ontario range from 5.05% to 13.16% of income and the combined federal and provincial tax rate is between 20.05% and 53.53%.

As a non-resident your non-Canadian income will not be taxed in Canada, but it will affect how many non-refundable tax credits you can claim.

Most visitors can stay for up to 6 months in Canada. If you're allowed to enter Canada, the border services officer may allow you to stay for less or more than 6 months. If so, they'll put the date you need to leave by in your passport.

Why the tax treaty between the U.S. and Canada exists. The U.S./Canada tax treaty, in summary, alleviates tax issues for U.S. citizens and residents living in Canada and Canadians living in the U.S. Most countries around the globe, including Canada, have some form of income tax that residents are obligated to pay.

Do Canadian citizens living abroad need to file taxes? ›

Canadians who live or work abroad or who travel a lot may still have to pay Canadian and provincial or territorial income taxes. Visit International and non-resident taxes for information about income tax requirements that may affect you.

Dual or multiple citizenship is legal in Canada. However, it may not be legal in the other country or countries where you hold citizenship.

The only option to avoid submitting a US tax return and paying US taxes abroad under current US tax legislation is to renounce your US citizenship. If US citizens fail to file US taxes while living abroad, they may incur fines, interest charges, or possibly legal repercussions.

A valid U.S. passport, passport card, or NEXUS card satisfies these requirements for U.S. citizens. Children under 16 only need proof of U.S. citizenship. Entry into the United States: When traveling by air from Canada, U.S. citizens must present a U.S. passport book or other approved identification document.

Resident Status

If the CRA establishes your residence status as a Canadian resident, you'll pay income tax on income earned anywhere in the world. Even if you spend some time working outside Canada, you'll still be liable to pay federal and territorial tax.

Not reporting income

10% of the amount of unreported income in the year. 50% of the difference between the understated tax payable (and certain overstated refundable tax credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report.

In Canada, there are no fees or penalties if you file your taxes late – as long as you don't owe anything. The main consequence of filing late when you owe nothing is a delay in receiving any returns you are owed.

Use this form to claim a refund of goods and services tax / harmonized sales tax (GST/HST) if: • you are an individual and a non-resident of Canada; and • the total of your eligible purchases, before taxes, is CAN$200 or more.

If you make $40,000 a year living in the region of Ontario, Canada, you will be taxed $10,446. That means that your net pay will be $29,554 per year, or $2,463 per month. Your average tax rate is 26.1% and your marginal tax rate is 25.9%.

How much tax do you pay on 30000 salary in Canada? ›

withholding tax rules

The general Canadian non-resident withholding tax rate is 25% which applies to certain Canadian-source income paid or credited to non- residents of Canada.

The federal government collects personal income taxes on behalf of all provinces and territories. It also collects corporate income taxes on behalf of all provinces and territories except Alberta.

If you are over 65 years old and your income is below $39,826, you can claim a non-refundable tax credit known as the Age Amount. For the 2022 tax year, the age amount is $7,898.

There's no penalty for failure to file if you're due a refund. However, you risk losing a refund altogether if you file a return or otherwise claim a refund after the statute of limitations has expired.

If you earn less than $10,000 per year, you don't have to file a tax return. However, you won't receive an Earned-Income Tax Credit refund unless you do file.

In 2021, for that same age and filing status, the income threshold was $12,550.

As long as you don't have a type of income that requires you to file a return for other reasons, like self-employment income, generally you don't need to file a return as long as your income is less than your standard deduction.

Do I Need to File Taxes? Not everyone is required to file or pay taxes. Depending on your age, filing status, and dependents, for the 2022 tax year, the gross income threshold for filing taxes is between $12,550 and $28,500.

At what age is Social Security no longer taxable? ›

Social Security benefits may or may not be taxed after 62, depending in large part on other income earned. Those only receiving Social Security benefits do not have to pay federal income taxes.

Some of you have to pay federal income taxes on your Social Security benefits. This usually happens only if you have other substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return).

In short, senior citizens are largely subject to the same tax requirements as other adults. There is no age at which you no longer have to submit a tax return and most senior citizens do need to file taxes every year. However if Social Security is your only form of income then it is not taxable.

If you ask a family member or friend to file your taxes, that is certainly allowed using CloudTax. Ideally, you make a final review of your return and oversee sending it to CRA. If someone prepares over 20 tax returns on behalf of someone else and/or collects payments, they are considered a professional tax preparer.

You Must File an Income Tax Return, if:

You owe tax to the CRA. You are self-employed and have to pay your Canada Pension Plan (CPP) premiums. Same for paying Employment Insurance (EI) premiums on your self-employment earnings. You and your spouse/common-law partner want to split your pension income.

The CRA has over 42,000 employees; approximately 10,000 in headquarters and 32,000 in the regions. Agency programs are delivered through 51 local tax services offices and regional tax centres located in every region of the country.

You may be considered a factual resident of Canada if you maintain residential ties with Canada and are: working temporarily outside Canada. vacationing outside Canada. commuting (going back and forth daily or weekly) from Canada to your place of work in the United States.

As a non-resident of Canada, you pay tax on income you receive from sources in Canada. The type of tax you pay and the requirement to file an income tax return depend on the type of income you receive. Generally, Canadian income received by a non-resident is subject to Part XIII tax or Part I tax.

Taxes Paid in the United States

Because you have a duty to report all your U.S. income on your Canadian return, the income is deemed taxable as Canadian income. The usually lower U.S. income tax rate could leave you with an amount owing for the difference between the United States and Canadian income tax rates.

compensation received from a province or territory if you were a victim of a criminal act or a motor vehicle accident. most amounts received from a life insurance policy following someone's death. most types of strike pay you received from your union, even if you perform picketing duties as a requirement of membership.

Is the IRS used in Canada? ›

Similar to the IRS in the U.S., the CRA is Canada's main federal taxing authority. The goal of the CRA is to contribute to the ongoing economic and social well-being of Canadians.

You can file your taxes online or by paper, or find other options such as having someone else complete them for you. Options include: NETFILE-certified tax software (electronic filing) Through a tax preparer using EFILE-certified tax software (electronic filing)

In Canada, the amount of money you make in a given tax year determines how much you'll pay in taxes. This is called a graduated, or progressive, tax system. The idea is that people who earn more pay higher taxes; people who earn less pay less.

As for the "dual citizenship" aspect of this inquiry, there is no separate application procedure by which one must apply for it. If you're already a citizen of either the U.S. or Canada and become a citizen of the other without taking active steps to renounce your original citizenship, you are a dual citizen.

If you haven't been in Canada for at least 730 days during the last five years, you may lose your PR status.

Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return.