"Legal issues working freelance" Topic

I have already done a few commissions for people in different parts of the world, and been paid for them. As yet, my friendly Canadian government remains clueless as to how much money has gone into my accounts. I'm sure I'm supposed to "declare" income or some such? Pay taxes on it? I don't know where to begin (or, honestly, whether to begin…)

How do your tax laws work in "The Great White North"? If you can, contact a local CPA for advice. Find one that specializes in tax laws. They would be the best ones to advise you. The govenrment can be clueless sometimes.

If the government doesn't KNOW about the money you made and isn't likely to find out, why on Earth would you want to TELL them about it?!?

Because they are likely to find out about it.

In the US taxes are a pretty complicated mess, especially for small business. I suggest you buy a program like TaxCut to help you. It's the only sane way.

In the US you don't have to pay taxes on something you don't make that much money on, I forget what the cutoff is but it is pretty low, maybe $800 USD a year or so.

Its currently $600…but its total income. So if you made less than $600 USD over the entire year you need not worry about paying any taxes, you would still file at the end of the year and could even get a return (due to things such as Earned Income Credits for children). Now if you made over $600 USD at your fulltime job and painted $500 USD worth of miniatures you would simply tack on the $500 USD as declared income; however, if you painted a great deal, enough to push you up a tax bracket or exceed your paid taxes you then you would need to start filing and paying quarterly to avoid owing taxes and facing fines.

<-- Not an Accountant, this is just what I've been dealing with over the past few years with my own freelance work and that of my wife.

In Canada I think they are called "Chartered Accountants", not "CPAs". If you decide to seek the services of one, do both of a you a favor and have your records in organized and in order, not just a shoebox full of receipts and bills. If you paint out of your home, you may be able to deduct a portion of your house (utilities, rent/depreciation etc).

If none of your customers are reporting the income to the Canadian version of the IRS (Inland Revenue?), I would echo DesertScrb sentiments-How are they going to find out unless they audit you?

Isn't chartered accountant a monty python song?

The python crew did a lot of chartered accountant jokes but I think the only song link was rwt and the dance link was The 1948 show. Could be wrong though.

In the UK you would declare it on your tax return. Would count as self-employed income.

It's been a while, but IIRC a sole proprietership business does not even have to be registered. You will have to include a statment of profit and loss with your annual tax return. The good side is you can include legitimate expenses as part of the cost of your business -- reference books, tools, materials. If you rent, that part of your space set aside for your work.

In the "good old days" you could apply a business loss to reduce your non business income, but they closed that one off. Which wook a few bucks out of mt pocket, but was probably legit.

Do seek some appropriate tax or legal advisor. You will have to save receipts and organize your books, but that is not a bad thing.

There are many chartered accountants in the python canon, but perhaps you're thinking of the Crimson Permanent Assurance?

Not that we're hijacking the thread.

Andrew

a sole proprietership business typically has to be registered in the state even if the Feds don't require it.

has to be registered in the state

^Perhaps. He doesn't live in a state.

The chances of the CRA ( canada Revenue Agency ) discovering your foreign income is remote. They are not that all knowing. ( I know because I worked there for too many years)

Foreign income or any unreported income is is discovered by what is known as a lifestyle analysis if and again that is a big "if" you are selected for audit.

A lifestyle audit looks at your manner of life how much rent/mortgage you pay, dollars in banks and other investments , property assets you own , etc and then sees if your declared income is capable of paying for your life. If there is a shortfall you are then asked to account for it. For example if you can show that you acquired extra money through a bequest or a lottery then it's fine. If you can't then CRA will add the additional estimated income to your returns and tax you on it. Thisprocedure is well established and has survived multiple legal challenges

Lentulus ' advice is very good and spot on. Legally there is no minimum amount that you can not report but again the less you earn the less chance of discovery.

One thing people forget is that your future pension income such as the Canada Pension Plan and how much you can contribute to an RRSP is determined solely by what you declare on your tax return. Many are surprised to hear that because they have not filed a return for many years or declared no income will have an affect on their pensions.

Look on the plus side of declaring the income. Now you can probably deduct all related expenses, like paint, brushes and minis.

Good Luck