Taxes For Freelancers: Ultimate 2022 Guide

August 22, 2022 Andrew AdolphAudits

Taxes for freelancers is a topic that’s not often talked about. Allow me to clear up some confusion.

Should You File Taxes as a Freelancer?

Don’t make the CRA come looking for you. If you’re making money as a freelancer, you need to report that income to the CRA.

Trust me; you don’t want to roll the dice on this one.

Be Aware of The Following Tax Deadlines:

• March 1 – RRSP contributions deadline
• May 1 – Tax filing deadline for most individuals
• May 1 – Deadline for any tax balance owing
• June 15 – Tax deadline for self-employed tax returns

Filing Taxes as a Freelancer

When it comes to taxes for freelancers, one of the things a lot of people overlook is that you will only be taxed on your net income.

What does this mean?

Basically, you are not taxed on the business expenses you incur over the tax year. That means anything your write-off will not be taxed.

The next thing is determining what you can actually write off.

More on that later… Let me show you how to actually file first.

Look for lines 135-143 on your tax return for self-employment income or lines 162-170 for gross self-employment income.

In addition, you will also need to fill out the T2125 form. This will inform the CRA about your income and business expenses.

Business expenses you can claim

A full list of expenses you can claim is listed on the CRA website, but for  casual freelancers, here are the main ones you’ll need to pay attention to:

• Advertising
• Cellphone and Internet bill
• Meals and entertainment
• Office Supplies
• Travel

Note that personal expenses cannot be claimed. If you want more information on what business expenses you can claim or additional advice on taxes for freelancers, check out this blog here.

GST/HST Registration

You won’t have to do any mental gymnastics when it comes to paying your taxes unless your income exceeds $30,000. Once you surpass that amount(congratulations if you do), you are no longer considered a small supplier and must register for a GST or HST number.

Now I know that the CRA puts the fear of God in people to encourage them to pay their taxes, but the truth is they aren’t keeping tabs on you.  By no means am I advising you not to pay your taxes. All I’m suggesting is that you stay on top of your tax obligations because the CRA won’t.

The $30,000 amount only applies to freelance income.  You only need to get a GST/HST number if you make $30,000 or more in freelance income.

Once you have your harmonized sales tax number, you’ll need to start charging sales tax.

If you get passed the 30,000$ dollar limit, I advise you to reach out to a professional like myself, as things can start to get a little tricky.

How To Keep Track Of Business Expenses

If you’re a freelancer and making a reasonable amount of income, I’d advise getting a separate business card for your business expenses.

Taxes for freelancers are a lot easier if you have a business credit card handy when you know you have major expenses coming up.

Taxes For Freelancers- The Bottom Line

Hiring a tax audit accountant or CPA bookkeeper can significantly help you keep track of your business’s financial position. Knowing your numbers allows you to maximize savings and profitable opportunities and avoid costly mistakes long term.

Are you a small business owner or freelancer looking to grow and sustain your business?

To book a free meeting, call 604-240-6173 or email me at andrew@gatewaytax.ca. I can answer any financial or tax-related questions and help you set a profitable financial plan. You can also visit the Blog for additional tax-related resources.

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.