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T4A Box 48 and T2125

by Celik
(Burlington ON)

The T4A slip was redesigned for 2010. There is now a Box 48 to report

The T4A slip was redesigned for 2010. There is now a Box 48 to report "Fees for Service" amounts. I have indicated the new box in red above.

Hello Bookkeeping Essentials,

I did a tutor job for a non-profit organization. I received my T4A for 2010 and want to show it on my T2125.

My fees for service show on the T4A slip in Box 28 with no footnote codes. How can I show it on my T2125 without double taxing me?

How do I make a proper tax return with this T4A Amount (Box 28)? How can I link the numbers with T1 General?

Thanks in advance.



image of fancy scroll lines



Hi Celik,

This is my understanding:

1. You need to ask to have your T4A slips amended so the self-employment fee for service amounts show in the new box 48. See the picture above.

2. You verify that your T2125 income amounts include the amounts in box 48. I need to go play in my software, but I would bet that if you input your T4A slip with the information in box 48, it will probably transfer it to your T2125. I'm just guessing. I will try it out and report back if this is not the case.







P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Comments for
T4A Box 48 and T2125

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Apr 12, 2011
Rating
starstarstarstarstar 		T4A Box 48 and T2125
by: celik

Thanks for the help.

I just want to make sure before preparing my T1 return,

Which one of the following is the T4A Box 48 amount that I need to report?

1-I am planning to report the T4A amount from Box 28 into Box 48 on the T2125 Business income line as income reported on the T4A slips?

2-or can I report it on line 130?

3- or do I report it on line 104? What is the advantage of reporting in here? I am also planning to report here.

Which one of the above is correct return? Please advise.

Thanks again for help.

Celik
Apr 12, 2011
Rating
starstarstarstarstar 		Tax Program and Box 48 on T4A
by: Lake

I tried entering a T4A slip with a box 48 entry into my tax program. It transferred the amount to the T2125 automatically.

That means you have to make sure that the income you input and/or transfer in from your accounting program to your T2125 does not include any amount reported in box 48 of a T4Aslip.

You cannot "plan" to report the figure where you want. It is a fact which type of income it is and where it is reported.

You also only report it in one place. You can't "plan" to report it in tow places. If you do report it in two places, you will be paying too much tax.

You MUST ask the NFP agency to amend your orignal T4A slip. If you just choose to report the income as Box 48, CRA will be contacting you when they do their matching review program in the summer and fall.

If the NPF doesn't understand what you are requesting. direct them to the CRA website. Have them look under What's new for payroll?
Apr 14, 2011
Rating
starstarstarstarstar 		In the same situation
by: Anonymous

Hello, I am in the almost same situation.

I worked for a periodic project at an university when I was looking for a permanent job. I got a T4A (Box 48) from this university. Now I have an another job so I don't have a business account.

In which line I have to fill this? Do I still have to fill out T2125?

Thank you for your help!



image of fancy scroll lines



Yes, report the income on form T2125.

If you are using a tax program, it will probably do it for you automatically.

If you had an offsetting expenses that are reasonable and incurred to earn that income, you can also deduct them on the same form. Just look at the form to see what is deductible or head on over to my Tax Planning Opportunities series of chats.
Apr 16, 2011
Rating
starstarstarstarstar 		T4A Box 48 and T2125
by: Jean

My wife received a T4A slip with 5 thousand in Box 48. With Turbotax, this forces form T2125 to be filled out.

She is being paid for work done for a British outfit as corrector/examiner. Basically she corrects exams she receives from international schools affiliated to the program.

She is being paid a going rate for each "exam" but she is not in business and, as far as we know, not an employee of this firm.

Looking at form T2125, it is even pretty hard to determine the INDUSTRY CODE. Moreover, she certainly does not have any of the numbers (CRA,Partnership,GST...)

Q: Should the company have used a box other than 48 in order to avoid T2125?

BTW (By the way): I entered the amount as if box 28 and my software did not generate a T2125.

Also, we do not intend to claim any expenses ...

Jean
Apr 16, 2011
Rating
starstarstarstarstar 		Surprise ... You Are Self-Employed!
by: Lake

Hi Jean,

CRA considers this income to be self-employment income. For the industry code I would select "Educational Services - 610000". It is found under the category "Health or social services".

As your wife is under the $30,000 threshold for mandatory GST/HST registration, it is not a problem that she does not have a GST number.

The T4A was redesigned in 2010. All "fees for services" are now captured in box 48 and reported on form T2125. While your wife may decide to not claim any expenses, this form shows the expenses she is legally allowed to claim as deductions to reduce your taxable income.

Your wife should also know that because she is self-employed, her earnings will attract CPP premiums. The tax return will automatically calculate this on schedule 8.
Apr 17, 2011
Rating
starstarstarstarstar 		T4A Box 48 and T2125
by: jean

Hi Lake,

Thanks.

Followed your advice and use industry code 610000. However, no CPP nor EI were performed by Turbotax. I checked also for Schedule 8; none.

Could it be due to the fact that Annette is already drawing a CPP pension?

jean

PS: Also, while waiting for a response, I contacted CRA who advised me to disregard T2125 and entered the $5 thousand on line 135, therefore forcing me to file manually.
Apr 17, 2011
Rating
starstarstarstarstar 		CPP Pension
by: Lake

Hi Jean,

Yes, the reason it wouldn't calculate CPP is because Annette is already drawing a pension. However, if she is under 65, this will change next year.

Currently, if you are between the ages of 60-64 ... and are receiving a CPP pension AND still working, no CCP deductions are currently taken from your pay cheques. However, under new rules effective in 2012, CPP contributions will be required. This means reduced take-home pay ... but on the bright side ... the additional contributions will result in additional benefits in the following year. After 65, the deductions will be optional.

Self-employed individuals do not qualify for EI therefore do not have to pay EI premiums unless they have registered under the special benefits program for the self-employed.

Form T2125 flows through to line 135 on the T1 Jacket. If you want to file electronically, report it on the T2125 and let it flow through to the line 135.
Apr 26, 2011
Rating
starstarstarstarstar 		Double input
by: Arlyn

When I input the amount from Box 48 into the T2125 my program (MyTaxExpress) computes it as a separate income so it doubles. Where do i enter it so it doesn't do this? Or is it my program?



image of fancy scroll lines



Sorry no idea as I'm not familiar with the program. In my tax program, you enter the amount in the "slip" box which transfers it to the T2125.
May 20, 2011
Rating
starstarstarstarstar 		T2125 and claiming expenses
by: Ingrid

Hi - Great site!

T2125 used for Business and Professional income shows the expenses you are legally allowed to claim as deductions to reduce your taxable income.

In 2009 we paid a fancy accountant to do my husband's income tax to make sure we didn't make any mistakes. $750 later he advised us that in order to claim expenses you have to have a minimum of 3 clients, otherwise you cannot claim expenses. Needless to say I have been doing his income tax since.

It's our understanding if you are a consultant providing services to a single firm, regardless of the number of outside firms you work with, you are out of luck. Could this guy have been wrong?
May 20, 2011
Rating
starstarstarstarstar 		Employee or Independent Contractor
by: Lake

Hi Ingrid,

My guess is probably not.

Your accountant was being guided by CRA's rules that have been tested in the courts on the difference between an independent contractor and an employee.

You will need to read through the questions found in the CRA publication "RC4110 Employee or Self-Employed?" to determine if you meet the guidelines to claim your income on form T2125.

If you were incorporated instead of being a sole proprietor, the rules are slightly different if CRA determines you are an incorporated employee.

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