A question about being self employed and not paying taxes.?

Question

Ok so last year I was self employed and as of yet I haven't paid out the taxes on what I earned. The only paper trail I have of this income would be within my bank. I am wondering how quickly and easily does Revenue Canada catch on to this kind of stuff? There are no records of the work I did as I was self employed and only worked with one client who paid me monthly with a check. Is there any way this can fly under the radar? I'm thinking probably not but just checking to see if anyone has pulled anything like this off or if anyone has been caught, what happened?

Answer 1

It is really a crap shot for self employed individuals not paying taxes and it depends. In some cases you can go ten or more years, in other cases they'll catch you the next year. It really depends.



Computer systems are CRA are always looking for unusual activity. Remember that your bank forwards interest statements to them. A program could easily trigger by noting that you have earned interest but didn't file that year. (That isn't that unusual as perhaps you just didn't own any taxes). If you are getting provincial health insurance computers may note that you have declared your income and yet didn't file taxes. It could be random audits of your employer -- since they will be declaring your work as an expense. If you do file income taxes and just fail to declare that income, it becomes much harder for them to notice (other than auditing you), but you now risk extremely serious offenses for filing a false income tax return.



If you are caught, in most cases they will just make you pay plus the fines and interest. They could file charges and jail you... but the reality is that tax collectors are paid on commission and they (and their bosses) would rather be paid than waste court time. Still it can be nerve-racking and you typically need legal (or accounting) representation to deal with CRA.



There are also a number of non-CRA issues by not filing. You won't get credit for CPP or EI, so you can't collect these. You won't have a notice of assessment which means that you can't get loans, credit, lines of credit, life insurance, etc. It makes obtaining provincial health insurance risky/difficult, since they verify income with income tax returns. It also makes it more and more difficult to file.



I would recommend talking with a tax preparation office. Have them run your 2011 taxes and see what you owe. If you didn't earn much... you may not owe any taxes (other than CPP and EI) or it might not be so bad. Worst case, you can file and make a token payment and then start paying regularly. They rarely come after you if you are paying.

Answer 2

Jail time is the usual answer. Or huge fines. Tax fraud is taken pretty seriously these days.



Gone are the days when "there is no paper trail." Your bank is one. Your client may try to claim he paid you to work, for instance.



Of course, some people do manage to avoid paying taxes, but they are few and usually they don't try to do it by flying under the radar. It's unlikely you'll get away with it for long. Pretty soon, you'll show up on the radar and that's when they start looking into records, going back several years. There will be a trail.

Answer 3

It depends. If you're in the construction industry, or the person you were working for has to file information slips, chances are good it won't take long. Construction industry reports sub-contractor payments. Some self employment income gets reported on T4A slips.



If they don't file information slips, but do claim you as a business expense, if it isn't too much money you may get away with it for a while. If they get audited, chances are really good it will get noticed.



The larger the amount is, the more likely CRA will notice. Once they notice, unless the amount is trifling, they will be expect you to file and pay.



That there is a paper trail makes it easy to prove how much you made once they catch on that you should have filed.



IMHO, you're better off to file rather than take a chance on it. If/when CRA catches up they'll expect you to pay the taxes with interest and penalties. You have until April 30th to pay (or pay interest on the overdue balance) and until June 15th to file a return. If the amount is large enough and it goes on for a while you could be charged with evasion.

Answer 4

Oh, so sorry, you at the instant are not remembering wisely, except you in addition to mght spend a great deal of money on gasoline, or maybe deduct quite some mileage; which capability you're making $10K, yet spent a tone of money to earn it. Assuming that may not precisely real, you will owe Feds approximately $500 in earnings tax, and approximately $1530 in self-employment tax. i anticipate you will owe Ohio interior the $a hundred - $3 hundred selection. you will additionally be penalized purely slightly for no longer having paid something in predicted funds.... besides the shown fact that, there are some issues you're able to do to chop back those taxes, in the adventure that your mothers and fathers are alive, in the event that they own their homestead, and you act earlier December a million. With their help, there are a pair of tax making plans "tricks" you ought to use to chop back the Fed and State earnings taxes to 0, and decrease the self-employment taxes to approximately $750, and your mothers and fathers won't pay an extra nickel in taxes. in case you have living grandparents who additionally own their own residence, you could shrink it no taxes, and no-one will pay any better tax. i'm assuming that the two your mothers and fathers and grandparents could supply you back any funds that i could coach you the thank you to offer them.... that's speedy, uncomplicated and criminal. yet I won't exhibit it right here in this communicate board. i'm a CPA that no longer purely prepares taxes, yet can coach you criminal the thank you to chop back your taxes. enable's decide a thank you to connect once you have an interest.

Answer 5

You will likely get away with it unless someone (neighbour, friend, client, supplier, ex-spouse) calls the snitch line.