Help? Showing a refund but I made under 10,000 and didn't pay tax?

[natfunk]

Hello,

Wondering if someone can point me in the right direction.

This year I was fully self employed (no day job that reports and issues T4). I made under $10,000 in Gross Revenue. I did not pay any sort of taxes monthly and have no T4 slip. I kept track of all income and expenses. My expenses were around $4,000 for my business so I made a net profit of around $6,000.

I am confused as to how I can possibly be showing a $1,682.04 tax refund? When I examine the credits area it is showing a tax credit for 453 Working income tax benefit. Is this correct? I just want to make sure this is legitimate and that I have not entered some data wrong.

On my return in the Other Employment Income Sources section, I entered in my Gross self employment income amount in the “Other Employment Income” section. I put in the “Specify” area > Freelance Business and I entered in my Gross Income amount.

Then I went into the Business Expert Interview area and entered all my business info. I run a web site and graphic design business as a DBA. It’s not incorporated or anything like that. In the T2125 Business Income area where it says "Sales, commissions, or fees", I entered in my self employment income amount. I entered in the same amount as I did for the Other Employment Income Sources section.

Did I fill in the right areas? 

How can I possibly get money back when I paid no tax and earn under the poverty line?

I do not want to get a Tax refund only to find out I made a mistake and have to pay the Government back so I am double checking here to see if this makes any sense at all and get some guidance.

Thanks!
NB

[Mohammed-TurboTax · Accepted solution]

Hi NB,

Please take out the amount you entered in "Other Employment Income". That should be nil in your situation. The only place you need to enter your self employment income (and $4K expense) is in Business Expert Interview area.

To answer your other question, yes you are eligible for the Working Income Tax Benefit (WITB). The federal government encourages individuals to join work force, and if income is under a certain threshold you get money back as calculated in WITB worksheet. It is not a mistake and you don't need to pay this refund back, as long as you can prove your income & expenses.

(...and I must commend your style to explain in detail. Here in the forum we usually get high level generic questions with little detail. Thorough statement like yours makes our response easier)

[natfunk]

Hi Mohammed! I work within the webspace and I know how frustrating it can be to get a generic question that could have 500 possible answers!!! Glad I was able to provide an accurate amount of detail to get a quick and correct response. It's appreciated. Thank you so much for clarifying that for me. I have taken my Gross Income amount out of the Other Employment Income section and only entered it in in the Business Expert area. It is now showing $0 for a tax refund, which is what I thought it should be. Would have been nice to get $1600 though! How would I qualify for the WITB on my Tax Return documents? While I live on my savings and build my business, it would be great to get any sort of benefits possible, but I'm not quite sure what's available to me as a Self Employed person. Would you happen to have any idea? I used to also have a day job in conjunction with my side business but there is no way to make the business grow unless I can do it full time. So right now, the pinch is tight, but it will be worth it in the end I am sure! Cheers, NB

[natfunk]

Interesting.. now in my Detailed Tax Summary in the Payments and credits section, the credit 453
Working income tax benefit is no longer available to me. Is this only for persons who are employed by a company and have a T4 but make under the Poverty limit?

[Mohammed-TurboTax]

WITB is available for self employment income, it is not limited to T4 income. There are other eligibility criteria which include personal information. For obvious reason i should not be asking them in this open forum. I will send you a private message in the email address you have on TurboTax file.

[natfunk]

Hi Mohammed! Sounds great. Thanks kindly. NB

[BosaNova1426]

its been sent already