PROFESSIONAL INCOME

[Martin M.]

Hi everybody!

In 2022 during the summer holidays, I worked as a CAD-designer, completing the requirement of my university for student practice education. I was paid with checks by my employer, without becoming an employee of his company, thus providing consultant's services as self-employed. I didn't receive a T4 or T4A slip.

In the interview setup under self-employment income T2125P I answered the questions about the fiscal period of my business (3 months), NAICS System code, that I am the sole proprietor etc. On the income page I wrote the gross professional fees (ca. $5000 incl. HST). I added the expenses for a home office (worked from home all the time), for 3 months only. I didn't have any further income in 2022.

At the end the review of the Federal summary the program shows me Net professional Income (line 13700) = Total income (line 15000) more than twice as much ($11,000+) as the income I put under Professional income ($5,000).

Why is this so and what can I do to change it?

Thanks in advance!

P.S. Could the fiscal year end and beginning be the problem? I started and finished work between June and September 2022.

 

[Maggie3]

Hello Martin M.

Your fiscal year should represent the entire year, for example enter 01-01-2022 and 31-12-2022. This is because it is the income you made for the entire year for this business, regardless if you only worked for 3 months. 

The reason the income is doubled is because there is a tax rule that requires the program to estimate the income for the entire year based on your income for 3 months. This is reported on form T1139 which is generated by the program. 

Simply change the date and your income will show as entered. 

For more information on this topic, refer to the CRA website below:
https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1139.html

 

[Martin M.]

Thank you!