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How to claim tips on taxes

how to claim tips on taxes

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Controlled Tips

Get your T4 slip from your employer. If your workplace has a controlled tip system, your employer should have included these tips with your regular income and deducted the necessary tax, Employment Insurance premiums and Canada Pension Plan (CPP) amounts. All of this should be recorded on your standard T4 slip, which is the standard statement of remuneration paid that almost every employee in Canada receives.

Complete your tax return. If your tips are included on your T4 slip, simply fill out your CRA tax return, filling in your total income, including tips, on line 101 of the return.

Submit your tax return to the CRA.

Direct Tips

Keep track of your tips throughout the year. If your workplace does not have a controlled tip system and you receive your tips directly, your employer will probably not record this money with your regular income. It is your responsibility to keep track of all of the tips your receive so that you can report them to the CRA.

Report your tips on line

104 of your tax return. Fill out a normal CRA tax return and include the amount for tips that you have kept track of throughout the year on line 104, which is for employment income not reported on a T4 slip.

Make your CPP contribution. Making such contributions is optional, but it is a good idea because it will affect how much CPP income you can receive when you retire as well as your eligibility for disability benefits. You can find out how much you are able to contribute by checking the amount that you have already contributed, which is shown on box 16 of your T4 slip, and using the Schedule 8 CRA form to calculate your allowable contributions. Include the completed Schedule 8 with your completed return.

Claim your CPP contributions. If you choose to make an extra CPP contribution, fill in half of your extra CPP contribution for the year on line 222 and the other half on line 310 on your tax return. These amounts must be exactly the same.

Submit your tax return to the CRA.

Category: Taxes

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