Summer months sees more babies born than any other time of year, which means moms across Canada are preparing for or heading off to mat leave soon. Keep this must-know tip in mind and pass it on to friends.
How to avoid owing the government money following your mat leave:
The government bases EI deductions on the premise that that will be the only income you receive in that tax year. If you receive top-up, worked earlier in the year of your leave, or have multiple employers, you will easily end up with a bill when you file your next return, due to insufficient taxes withheld.
To prevent this, request to have more taxes withheld by filing a TD1, found here. And if you’ve already started your mat leave, yes, you can still request more taxes be deducted.
There’s no one formula that fits all to determine how much more to take off. It’s best to consult your financial advisor. Alternatively, consider how much income tax would be payable every two weeks on your extra earnings or top-up, and request that figure as an extra deduction.
To read more on the subject, check out this great article by The Vancouver Sun’s blogger, Curious Dad. And if you’ve had this happened to you, please let us know. We’d love to hear your story.