You are expected to pay your taxes once you earn or receive income throughout the year – it’s your duty. If you fail to do this, you should keep in mind that you will be contacted and possibly investigated by the CRA. It’s always better to pay it up honestly and accurately, because it will cost you much more if the agency finds out and charges you extra.
In terms of estimated taxes, they are used to pay income tax, self-employments tax and alternative minimum tax. You need to ensure that you pay your taxes and pay them on time, so that you don’t receive a penalty. We’re going to show you who’s expected to pay estimated tax, who isn’t expected to pay estimated tax and when to pay it.
Who’s expected to pay estimated tax…
If you’re an individual, like a sole proprietors, partners and S corporation shareholders, because they have to make a number of estimated tax payments if they expect that they will owe about $1,000 or more in tax, when their return is filed. If you have a corporation, you will be expected to make estimated tax payments as well – $500 plus, when your return is filed. You may also have to pay estimated tax for the current year if you had more than $0 in taxes from the year before.
Who’s not expected to pay estimated tax…
If you’re someone who receives salaries and wages, but you ask your employer to withhold more tax from your earning, then you won’t have to pay estimated tax. Also, if you had no tax liability for the previous tax year, were a Canadian resident or citizen for than year and your previous tax year covered an entire 12 month period, then you are not expected to pay estimated tax.
When estimated tax payment is expected…
You need to pay the estimated tax at the specific payment due dates, which are four times for the tax year. Try to do that on time so that you don’t have to be subjected to late penalties.
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