I run an in-home daycare and heard that if I make under $8000/year that I don't have to claim, is this true?

Question

I have been providing receipts for my clients and have given them their end of year receipt tallying their totals. But I had heard if my income was under $8000 I didn't have to claim it...obviously I would still be filing my income tax but was just uncertain about what the maximum amount is that you can make when doing daycare without having to claim it. Thanks a lot!

Answer 1

not true, if you make over $600 per year - you need to file tax return.
chin

Answer 2

You have to file a tax return if you run any kind of business, or have any income. If your income is under 5,500 (I think that's the new amount), and your spouse is filing, claiming your wages as a spousal deduction, then you wouldn't have to file Since you give out receipts for your services, you must file in order to take advantsge of any credits that might apply to you. Failure to do so could mean an audit for the past five years.
Your local Revenue Canada office can give you free help and advice on anything you need to know.

Answer 3

Well, no, that's not true.

If you were an employee and making under $8450 for the year, then that would be correct. This assumes you're single - if married filing joint and spouse had no additional income or the total for both was under $16,900 you wouldn't have to file. The above also assumes you're not a dependent of someone else.

The kicker here is that since you're running your own business, you're not an employee. If you were an employee, your employer would have been taking out FICA (social security and medicare) from each paycheck, and the employer would have been paying an equal amount to what was deducted from your checks. That still has to be paid. It's called "self-employment tax", and is owed if you have more that $400 income from your own business. So that will be 15.3% of your net income (what you took in minus the expenses of running the daycare). That goes on your 1040 also - you'll fill out a 1040-SE form to calculate it. If you made $5000 for the year, that's $765 you owe in self-employment tax.

You are supposed to pay this quarterly. If you haven't been, you'll have to pay it when you file, and will be subject to possible interest and penalties because it wasn't paid when it should have been.

Sorry - I know that's not the answer you were hoping for.

Edit: Oops, just noticed this question is under "Canada". My answer was for the US. A lot of US questions get put under other headings by mistake, so I won't delete this in case that's what happened and you're really in the US. But if you're in Canada, forget about my answer, I have no idea what Canadian tax laws are. Sorry.

Answer 4

In Canada, any income made is reported on your income tax return. If you are filing, you are obligated to report this income... especially if it will be added to other income for the year. If this were your only income for the year, you wouldn't be taxable anyway because it's under the basic personal amount, but they use this amount to calculate your credits, etc. Remember that your clients will probably be submitting their receipts to CRA for childcare expenses. So they already know that you are making this money. It's best to claim it for the year(s) in question rather than be audited down the road.

Answer 5

NOt sure. But I do know one thing. If you don't file at all, they can audit you for years to come. If you file, they can only audit you for 3 years (unless you have committed fraud or misreported your income.)

I always file because I don't want to be audited 10 years or more later like they did to my poor 70 year old mom who didn't file.

Answer 6

I believe you have to file for any income made, especially if you don't have taxes taken out of it.

Answer 7

I think it's $2000 or less that you don't have to claim. It should say so on the 1080 form, I think.