Asked
I recently started a job in care work, and I'm thinking about asking for extra taxes to be deducted from my wages so I don't end up owing any taxes. How much would you recommend I have them deduct each month? Is $70 too much? Also, if I overpay, will I get a tax refund? I just want to avoid owing taxes at the end of the year and having to find the money to pay. I'd rather pay a bit more now to ensure I don't have to pay anything later on. I would appreciate suggestions.
Clint’s answer
When one files their taxes and assuming they were prepared correctly, if they have overpaid, they will get that money back.
There isn't enough info here to advise on taking more taxes off, but there are many comments on what can happen if you have multiple jobs.
Here is how the payroll software works. Every pay period, whether it be weekly, biweekly, semi monthly, monthly, or whatever the scheme is there will be a calculation of how much you earned in that pay period, how much you earned prior to that pay period, and where this pay period sits in the calendar year... It can only use the info it has in the system and then calculate a reasonable prediction on what you will owe in taxes, cpp, and EI for the year based on the pay in that period and the trend previous to it. It will not have info on other sources of income and how much you have paid in taxes, cpp, and EI.
Because we are taxed marginally in Canada, we must pay higher taxes as a percentage in higher margins.
This means that if, for example, you have two jobs that make $25,000 per year, both payroll software will calculate taxes, cpp, and EI as if you made $25,000/year, and you will likely end up owing because your tax rate will be higher than $25,000.
Perhaps you take an extra $70 off, perhaps you take an extra $30 off. There isn't enough info here to give a solid answer for you.
Also, receiving money in a tax refund at the end of the year is not always directly related to being over taxed. Maybe you have the BC renter's credit of $400. For this credit, if you paid the exact amount of tax that you were supposed to, but you qualify for the full refundable portion of this credit, you would receive $400 back from the taxes you paid. There are many refundable credits like this that are not a result of overpaying.
I hope this helps you to attain an answer that works for you.
August 21, 2024
From Ask Clint: real questions from a Canadian public finance forum, answered by Clint Cole. Names are changed. This is general information, not advice for your situation, and rules and dollar figures may have changed since Clint answered. Terms