Paying Taxes as a Freelancer In 2022: Ultimate Guide

December 5, 2022 Andrew AdolphAudits

Paying taxes as a freelancer can be tricky. If you don’t do them, the CRA will get you. If you do file, you ought to make sure you do them right. Here’s how and why you definitely don’t want to fool around when it comes to paying taxes as a freelancer… 

The good old CRA- always around and not going away anytime soon. What does this mean? Simply that you must file your taxes or risk getting audited. Now, if you’re a bit behind, don’t worry; I’ve got you covered. Here’s the full ultimate guide on how to pay taxes as a freelancer. 

Paying Taxes as a Freelancer: Why You Should 

While it is true the CRA doesn’t always catch people who don’t pay their freelance taxes, there is a catch. Not filing an income tax return can lead to expensive penalties and, in the worst cases, even jail time.  

Paying taxes as a freelancer is required if you make over $13,808 a year.  

Oh, and are you familiar with GST/HST? If you’re not, click on my link here because that is definitely important need-to-know information. The reason why is if you make over $30,000 in freelance income, you are obliged to collect and remit sales tax on your invoices. My blog will tell you all you need to know about GST/HST and how to register if you don’t have a number. 

Pay Taxes As A Freelancer: How You Actually Do it 

Now that we’ve gotten that out of the way, I’ll give you the information that you requested when you clicked on this blog. First, you will want to fill out a T2125 form. Basically, this is the form used to report your business income and expenses, and the difference between the two, which gets multiplied by your tax rate. If you have separate freelance businesses, you must fill out a separate form for each one and add them together. Here’s a link to the T2125 form. 

Paying Taxes As A Freelancer On Upwork 

So I’ve gotten a lot of questions about taxes and Upwork recently. Just to set the record straight and hopefully not burst any bubbles, you still will have to pay taxes. How to do it is very simple. Upwork will send you a notification that will request that you update your tax information when it comes close to the time the CRA will collect from you. At the time of this blog, some of you may have already gotten this notice. 

If you are unsure, rifle through those endless emails in your inbox, and you might just find the letter I’m talking about. Once you update your information, they will automatically send your tax info to the CRA. Paying taxes as a freelancer on Upwork is rather easy this way. 

The Tax Deadline Is Coming! Don’t Wait! 

As you may have presumed from the header, waiting till the last minute to file your freelance taxes is a terrible idea. Self-employed individuals have until June 15th to file. However, the CRA assesses interest on unpaid amounts starting May 1st. 

The Bottom Line 

It’s not just freelance-type filing that I help people with. If you’re a small, medium, or large business, you can book a free consultation (yes, it’s free, no strings attached, and I don’t sell people on anything they don’t need) with me, and I’m more than sure I can assist you. 

To book a free meeting, go to my “book a meeting” page, call me at call 604-240-6173 or email me at andrew@gatewaytax.ca. If you’re just diving into taxes and want to learn more about how they work in Canada, visit my blog! 

Andrew Adolph

Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.