If you’re a Canadian taxpayer, you probably already know that it’s important to keep track of your income and what’s taxable and what’s not. But do you know the difference between taxable and nontaxable income? At DPC, as a tax accountant Edmonton, we’re here to help you understand the difference and ensure that you’re paying the right amount of taxation.
What is Taxable Income? How can a Tax Accountant Edmonton Guide you through this?
Taxable income is income that the Canadian government considers taxable. It includes income from employment, rental income, interest, dividends, capital gains, and self-employment. It’s important to note that even though some items may not be taxable in Canada, they may still be taxable in other countries.
Taxable income is the total amount of money received by a person or corporation on which taxes are imposed. Taxable income can be earned from wages, investments, business activities, and other sources. Taxpayers must report their taxable income to the Canada Revenue Agency (CRA) when filing annual tax returns. Taxes aren’t automatically deducted. You can ask that federal income tax be deducted from your monthly payments by: signing into your My Service Canada Account.
Tax accountants in Edmonton can help taxpayers understand their taxable income and ensure they are properly filing their taxes. Taxable income is subject to applicable tax rates, deductions, and other credits as set by the CRA. Taxpayers should consult a tax accountant Edmonton for additional information about what constitutes taxable income and how it is taxed. Tax accountants can also help taxpayers maximize deductions and credits to reduce their taxable income and save money.
Examples of taxable income:
Employment Income: You earn from your jobs, such as wages and salaries, tips, bonuses, and vacation pay.
Business income: This is the income you earn from your own business, such as consulting fees, commissions, and self-employment earnings.
Investment income: You earn from investments, such as interest, dividends, capital gains, and rental income.
Pension and RRSP income includes your registered retirement savings plan (RRSP) and other pension plans, such as the Canada Pension Plan (CPP).
Other sources of income: This includes income from alimony, scholarships, grants, and prizes.
What is Nontaxable Income? How can a Tax Accountant Edmonton help?
Nontaxable income is income that is not considered taxable by the Canadian government. It includes gifts, inheritances, life insurance proceeds, and government assistance. It’s important to note that even though some items may not be taxable in Canada, they may still be taxable in other countries.
Nontaxable income refers to money that is not subject to taxation. For example, a Tax Accountant Edmonton may advise that certain government benefits, such as OAS, are nontaxable. In addition, any amount received from the Canada Child Tax Benefit and GST/HST credit is also considered nontaxable. Any income from gifts or alimony after a divorce is also nontaxable.
At DPC, our Tax Accountants have the experience and knowledge to help you understand which income sources are taxable and which are not. We provide comprehensive Tax services in Edmonton that allows us to help our clients maximize their Tax savings using all available Tax credits and deductions. Our Tax Accountants understand the Tax law and can provide expert advice on how to best approach your Tax filing. Contact DPC Tax Services today to learn more about your nontaxable income and other Tax services we offer.
Examples of nontaxable income:
Scholarships, fellowships and grants: These types of income are typically not taxable as long as they are used for the purpose they were granted. For example, if you are awarded a scholarship to pursue a specific degree, this money will not be taxable.
Gifts and inheritances: This money is usually not taxable if you receive money from a relative or friend. However, if you receive a large sum of money from an inheritance, you may need to pay taxes on a portion of the inheritance, depending on the value of the estate.
Child support payments: This money is not taxable if you have a court order or written agreement with the other parent stating that they are required to pay child support.
Disability payments from Social Security or private insurance: These payments are intended to help individuals with disabilities cover the costs associated with living with a disability.
Life insurance proceeds: The proceeds of life insurance policies are not taxable in Canada.
At DPC, our tax accountant Edmonton are here to help you understand the types of taxable income and ensure you’re filing your taxes accurately. We know that taxes can be confusing and intimidating, so we’re here to ensure you’re confident in your tax filing. Contact us today to learn more about how we can help you with your taxes!