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Working two jobs? Beware of the potential tax bite
Two jobs may help boost your income during the year, but if you haven’t completed your paperwork correctly you could end up owing when you file your tax return.
Maybe you work full-time but you have decided to take on a few extra weekend hours at a part-time job, so you can save for a special purchase. Or perhaps you are a student and decided to take two part-time jobs because you can’t work full-time hours. It seems like a great idea until tax time comes.
Every Canadian taxpayer is allowed a personal exemption. For 2012, you can earn $10,822 before you begin paying federal income tax. And when your employer asks you to complete a TD1 Form so they can calculate how much tax to withhold, you claim this personal exemption amount.
But if you have two employers and they do not know about your other job, they both calculate your tax withholdings using this personal exemption amount. However, you are only entitled to claim this credit once. Unless you have told your employer you have another job, chances are you will owe taxes when you file.
You can avoid this by telling one or both of your employers about your other job. You can request that only one of them includes the basic personal amount in their calculation. You don’t have to tell your employer but it is recommended to make sure the right amount of tax is withheld. You need to ensure that you are not claiming the personal amount more than once so complete your TD1 Form correctly.
But whatever you decide, do have some sort of plan. It is disheartening to work two jobs only to face an unexpected expense at the end.
Doug MorganMaster tax pro and franchise owner
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COMMENTS
I have 2 jobs. One is full time and the 2nd is part time approx. 22 hours bi-monthly at minimum wage. Both are with the same company. They add both incomes together and deduct taxes based on the gross of the two jobs together. When it comes tax time how is this going to effect me and should I be asking for separate t4 slips?
Jill – There is no reason for you employer to issue you two separate T4s. They may choose to do so for their own tracking purposes. Since your tax withholding is based on the total gross income you should be fine come tax time.
I work 2 part time jobs. One is taking an extra $20 every pay for taxes. Will this be enough to cover me next year? I’m working around 20-30 hours at this job and 20 hours at the other job for min wage.
Lynsey – unfortunately, I would need more information before I could answer your question. You can estimate your earnings and enter the information into H&R Block at Home online (https://www.hrblock.ca/services/taxes_online.asp) to give you a rough estimate of your tax obligations for next year (it is free to use until you want to file a return). It will not be an exact estimate since it will be based on the 2012 amounts but if you enter the numbers and have a balance owing, you will most likely be facing a tax bill in 2013. ~CH
I have a full time job and currently took up another part time on call job. I’ve never filled out a TD1 form for my full time job however I still get tax deducted etc. For this part time job, they do require me to fill out a TD1 form, should I be claiming Line 12 and Line 13?
May – if you want to avoid a tax bill, you will need your part-time employer to withhold tax. However, I would not recommend claiming credits you may not qualify for. I would recommend contacting a tax professional to review your full-time and part-time pay and determine how much tax you need withheld to avoid a tax liability when you file. Or you can plan to save the money you will need when you file your taxes. ~CH
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