I want to do childcare in my home. Do I have to do taxes on the income?

Question

I would like to take care of two children in my home for some extra cash. I'm not licenced, and was wondering if I have to do taxes on the cash i make and how much do I deduct a month for taxes? I'm in Vancouver, B.C. Canada.

Answer 1

In principal Yes you do, but you would not do it, it would cost more money to get license and you pay higher taxes, etc.. But The government doesn't care for and 200-500 dollars a month, they will not bring agents to investigate.

Answer 2

Any money you charge your clients for the service is considered business income and is taxable by law. You can deduct any related expenses from the income, such as supplies, training courses, and possibly a portion of your household expenses including mortgage interest, utilities, insurance etc. When you file your tax return at the end of the year you will have to pay tax on the net profit generated by the business.

Assuming you have no other sources of income, then the first $9,000 (approximately) will be tax free, and anything over this will be taxed at 21.2% (up to $34,397, after which the rate goes up). If you have other sources of income, then the business income will be taxed at a rate corresponding to your income bracket. You will also have to pay CPP on your business profit exceeding $3,500 at a rate of 9.9%.

For personal tax rates by income level, see the following link:
http://taxtips.ca/bctax.htm

Answer 3

Check locally, but any money earned over a certainamount is eligible for taxation.

As for licensing, if you are simply taking care of a couple ofkids, you may need to get a child care license AND insurance to protect you against loss.

Answer 4

Yes you should, and remember the parents will want to claim the money they pay on their income taxes, so CRA will easily catch this.

Remember you do get to claim expenses as well, so it might not be all that bad. You might not owe very much at all, because of the basic exemption, and your deductions for expenses.

http://www.cra-arc.gc.ca/tax/business/topics/daycare/menu-e.html

Filing your return will also ensure your GST credits will come to you, and any CCTB.