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2017 T4 and Tax Deductions

Lumber

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Evening All,

This year I received two different pay "boons": the retro pay raise and a retro sea-pay back pay. This occurred over two separate pay cheques.

Now, my understanding of taxes and marginal tax rates is not the greatest, but what I'm seeing on my T4 and my initial calulations for tax return don't quite make sense to me.

I thought that when you received a really large pay cheque like in these cases, you end up paying more in taxes on that specific pay cheque then you really should have, resulting in a tax return at the end of the year.

However, I'm actually looking at owing taxes this year! Can anyone shed some light on this?

For clarity's sake, I have a really simple tax return: I have only 1 T4 to report, no other sources of income, no investment income, and no contributions have been made to my RRSP. 

Thanks.
 

PuckChaser

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You're going to pay tax at whatever rate the pay system is using, but if the back pay was big enough to push you into another tax bracket then you've likely not paid enough tax on all that extra money.
 

SeaKingTacco

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Lumber said:
Evening All,

This year I received two different pay "boons": the retro pay raise and a retro sea-pay back pay. This occurred over two separate pay cheques.

Now, my understanding of taxes and marginal tax rates is not the greatest, but what I'm seeing on my T4 and my initial calulations for tax return don't quite make sense to me.

I thought that when you received a really large pay cheque like in these cases, you end up paying more in taxes on that specific pay cheque then you really should have, resulting in a tax return at the end of the year.

However, I'm actually looking at owing taxes this year! Can anyone shed some light on this?

For clarity's sake, I have a really simple tax return: I have only 1 T4 to report, no other sources of income, no investment income, and no contributions have been made to my RRSP. 

Thanks.

I feel your pain.  I owe 5 figures this year.
 
J

jollyjacktar

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Lumber said:
Evening All,

This year I received two different pay "boons": the retro pay raise and a retro sea-pay back pay. This occurred over two separate pay cheques.

Now, my understanding of taxes and marginal tax rates is not the greatest, but what I'm seeing on my T4 and my initial calulations for tax return don't quite make sense to me.

I thought that when you received a really large pay cheque like in these cases, you end up paying more in taxes on that specific pay cheque then you really should have, resulting in a tax return at the end of the year.

However, I'm actually looking at owing taxes this year! Can anyone shed some light on this?

For clarity's sake, I have a really simple tax return: I have only 1 T4 to report, no other sources of income, no investment income, and no contributions have been made to my RRSP. 

Thanks.

I ended up oweing another $5K last year due to the sea pay back pay.  My pay raise back pay went to pay that boot fuck.  I imagine I'll be hammered again this year too.
 

Old EO Tech

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PuckChaser said:
You're going to pay tax at whatever rate the pay system is using, but if the back pay was big enough to push you into another tax bracket then you've likely not paid enough tax on all that extra money.

This is exactly what happened to me, I paid 22K in taxs and ended up owing 20K because the backpay put me into the next higher tax bracket.

Jon
 

SupersonicMax

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That's hard to believe.  Imagine you only paid taxes on your salary, excluding backpay, you would have made 80K gross in Quebec (one of the most taxes province) and paid 22k in taxes on your salary.  In order to owe an extra 20k, you would have had to have a 45k backpay with no taxes deducted from it, which is very unlikely.  I would check your tax report...

For those who think "jumping in the next tax bracket" is a big deal: It is not.  Only the portion at or above the tax bracket threshold is taxed at the higher rate.  Let's say the tax brackets are as follows:

0-50k: 26%
50-100k: 33%
Above 100k: 37%

If your taxable income is 85k, you would pay 26% taxes on the first 50k and 33% on the remaining 35k.
 

SeaKingTacco

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SupersonicMax said:
That's hard to believe.  Imagine you only paid taxes on your salary, excluding backpay, you would have made 80K gross in Quebec (one of the most taxes province) and paid 22k in taxes on your salary.  In order to owe an extra 20k, you would have had to have a 45k backpay with no taxes deducted from it, which is very unlikely.  I would check your tax report...

For those who think "jumping in the next tax bracket" is a big deal: It is not.  Only the portion at or above the tax bracket threshold is taxed at the higher rate.  Let's say the tax brackets are as follows:

0-50k: 26%
50-100k: 33%
Above 100k: 37%

If your taxable income is 85k, you would pay 26% taxes on the first 50k and 33% on the remaining 35k.

Max,

Have you done your taxes yet this year? Everyone I have spoken to, owes money.

It could be there is a problem with DND/CRA.  Or it could be by design...
 

SupersonicMax

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SeaKingTacco said:
Max,

Have you done your taxes yet this year? Everyone I have spoken to, owes money.

It could be there is a problem with DND/CRA.  Or it could be by design...

I am not saying it is impossible you owe - that depends entirely on how much was taken at the source vs what you actually owe.  What I am saying is that if you gave 22k in taxes already, it is unlikely you owe an extra 20k, unless no taxes were taken at the source of your backpay and your monthly pay tax deductions were screwed up.

Yes, I did my taxes.  I am getting $1,900 back and no RRSPs (just my portion, not my wife's)
 

runormal

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I owe money, but that's because my reserve income was taxed at like 12% on average or something stupid like that. So I just bought a bunch of RRSP's.

Edit- my back pay was taxed at around 23%.
 
J

jollyjacktar

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Everyone of us who recieved the sea pay back pay ended up paying at tax time.  For me in the end my $16K ended up being around $10, 300 in taxes after doing my return and being gouged again.  A Phyrritic benefit in the end.  I'm dreading to see how much will be taken from me this year for the raise from last year (that went right back for the extra sea pay taxes).
 

NavyShooter

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I just did a 'simple tax' online calculation and it says I might owe up to $4400.  Ish. 

That's before considering childcare and RRSPs and other stuff, so I might be OK, but I got both the SDA audit money and backpay this year.  I was actually somewhat shocked to see that my annual income this year in line 14 was 6 figures.  First time I have ever seen that.  And the deductions were less than 30%....so I'm concerned just looking at it.

I suspect I will end up owing. 

We'll see.
 

Lumber

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Ok, after listening to you guys, the $85 I owe really doesn't seem that bad.

I was just really hoping for a return...
 

macarena

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Hi, mates!
I would like to take this topic back in order to avoid to create a new one.
My question is: Does someone know if the Canadian Income Tax offers some subvention/deduction to those going to move to a remote city with wife and kid?
 

dapaterson

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Move expenses not paid by an employer are deductable.  There's info on the CRA website about relocation expenses.
 
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