Calculating Tax

[Maybelater]

After a few years out of school and general stupidity on my part, I am trying to get my life back into proper order so I can return to post-secondary. I have a good job with as much over-time as I want that is paid at a generous rate.

I've worked OT in the past when I had easier tasks as an entry-level, but once I was moved to the duties I was hired for I had to wait to continue doing over-time until I was passed probation, or I risked falling behind my productivity quota and not being made a permanent employee (union stuff).

When I got my pay cheque I was surprised to see only how much I got to keep. Obviously I need to pay more attention to the tax system. Is their a good source online to help me determine my deduction from cheque to cheque on hourly wages?

[ExtraSlow]

Well, there are lots of calculators for the income tax portion, both provincial and federal. However, one thing that always bugs me if that the CPP and EI deductions are taken early in the year, and then not at the end of the year. The exact amount depends on how much you make. I haven't found a good online calculator for that.
Also, your company may be deducting too much (or too little) for the income tax. If the company you work for has a Hr or payroll person, they should be able to run though it pretty quickly.

[tch7]

The easy thing to do is check your last couple of cheques and compare the net to the gross. The deduction should more or less be a consistent percentage from pay cheque to pay cheque. The CRA doesn't care if its straight pay, OT, vacation pay, etc.

For example, last year I had a pay cheque where I worked a standard 80 hours and the net pay was 65% of my gross. Another cheque I worked 80 hours + 103 OT hours and the net pay was 67% of my gross (I had reached CPP/EI limits by then, hence the higher percentage).

Working OT can potentially bump you up into a higher tax bracket on a particular pay cheque, but any excess contributions are returned when you file your annual tax return.

[triplep]

online? I don't know if there is a good source...

but I know that most employers will base their deductions on your salary.

Basically what it comes down to is that they will assume that you will claim both personal amounts 10,XXX ish federaly and 16,xxx provincially.

they will base your deductions on those amounts so that at the end of the year you should owe 0 taxes. if you only claim those.

OT pay i find is a little different. They just straight up tax it typically at what ever income bracket you fall into (or at the highest rate 29% Fed and 10% Prov). Since you have already claimed your basic personal amounts, they will deduct taxes at the highest level.

[Tik-Tok]

http://www.finance.alberta.ca/calc-script/tax_calc.html

Assume your pay is the same for every cheque (assuming bi-weekly), and multiply it by 26. Put in your info, click "tax summary", then divide those taxes by 26. It's last years tax rates, but it will give you a good idea. Also you have up to $790/year in EI to pay, and $2220 in CPP. Don't forget those.

[nickyh]

Try this http://www.cra-arc.gc.ca/pdoc/

[garnet]

Originally posted by Maybelater
After a few years out of school and general stupidity on my part, I am trying to get my life back into proper order so I can return to post-secondary. I have a good job with as much over-time as I want that is paid at a generous rate.

I've worked OT in the past when I had easier tasks as an entry-level, but once I was moved to the duties I was hired for I had to wait to continue doing over-time until I was passed probation, or I risked falling behind my productivity quota and not being made a permanent employee (union stuff).

When I got my pay cheque I was surprised to see only how much I got to keep. Obviously I need to pay more attention to the tax system. Is their a good source online to help me determine my deduction from cheque to cheque on hourly wages?


when you were first hired you signed a T1 form, on the back of that is a section for additional deductions

ask for another T1, and resubmit it, including to fill out the section of additional deductions
in past i would sign for $20-25 taken per cheque, then come return time, i always got money back

see, your employer will estimate your deductions, so overtime will potentially put you into a higher bracket, but yet they will continue to deduct the same amount per cheque

[lellowrx7]

Good rule of thumb to follow, multiply gross by .3
Subtract your answer from your gross
Will work out to roughly what your going to net.

[J-hop]

Originally posted by lellowrx7
Good rule of thumb to follow, multiply gross by .3
Subtract your answer from your gross
Will work out to roughly what your going to net.

Or just multiply gross by 0.7 and save a step :thumbsup: