Paying Taxes as a Contractor. Get Organized Today!
As an on call nanny, you are considered a contractor, so rather than paying taxes throughout the year, you pay your taxes in one lump sum at tax time.
Even though tax season is behind us for this year, if you start getting organized NOW, cutting that cheque to Revenue Canada next spring, will not hurt as much.
Remember that ALL income must be declared!
For today’s nannies, getting ready for tax time can be daunting. Sorting through a mountain of paperwork is a most unwelcome chore to anyone with work commitments and family obligations. Whether you do your taxes personally or simplify your life by using a professional accountant, you must collect, sort and organize the required documents.
The following tips will help ease the stress of tax season.
1. Locate the necessary forms and papers and store them together in a file folder or envelope. Your folder should include:
I have a 1 year old daughter. I started work a month ago and I’m leaving my baby with my mom. I want to pay her $400 monthly …she didnt wanto to accept any payment but we agreed on that amount. Does my mom have to count that income for taxes? Can I claim her pay as a childcare expense? Should I hire her as a nanny? Do I have to apply for a business number?
If you employed a nanny in 2010, their T4 slip is due on February 28, 2011 which is today.
Here are some tips to help you get started if you haven’t done so.
Organize your payroll records and your Statements of Account for Current Source Deductions.
You will need to file a T4 Return for each nanny that you employed in 2001 and you will need to file a T4 Summary Return for yourself as the employer.
Find the family that you want to share with FIRST. Talk talk talk, and write everything down so that you have come up with a clear plan of attack together. Even if you love a family on a personal level their approach to child rearing issues may be quite different, remember this is ALL about your child…be clear about what your CHILDCARE priorities are.
Hiring a nanny can be affordable. You just need to be aware what the factors are involved in a nannies salary. Here are some of the costs to think about.
What is Net vs. Gross?
As a household employer you are responsible for paying and withholding your nanny’s taxes.