I hope you’re okay!
I need your advice on how much to pay in installments for September and December this year. What information would you need to help me?
When is the deadline for paying them in September?
The September installment deadline is September 15, but given the COVID-19 crisis, it has been pushed back to September 30.
As a dentist, you have been particularly affected by the crisis.
There are three methods of calculating installment payments, we have the right to choose the one that suits us best:
- Government method: the first two installments are a quarter of the tax payable for the fiscal year preceding the last year, the next two are a quarter of the tax payable for the previous year.
- Previous year method: divide the tax payable for the previous year by four and make four equal installments.
- Method of estimating taxes payable: we estimate the tax payable for the current year, and we make four equal payments that will cover the taxes payable.
If income has fallen a lot in 2020, it will be interesting to calculate the estimated tax payable (method 3) in order to pay only the really necessary instalments.
To do this calculation, we simulate the income and deductions and we see how much real tax we will have to pay in the next income tax return.
In your specific case, I would need the self-employment income and expenses projected for 2020, this will allow us to anticipate the 2020 tax bill and establish the right payments.
For other deductions (RRSP, child care expenses, medical expenses), I will use those for 2019, unless you advise me that there are significant variations in these deductions from 2019 to 2020.
We can review everything together and take the right strategy.
See you soon,
Nicolas Godbout, M. Fisc., Pl. Fin.