Are you a Canadian taxpayer? Do you want to learn more about earned income? If so, this article is for you!

Earned income is a term used by the Canada Revenue Agency (CRA) to describe the money you earn from employment, self-employment, or business activities. It is the money you make before taxes, deductions, and other withholdings are taken out.

When it comes to taxes, your earned income is important because it determines how much tax you owe. The higher your earned income, the more tax you will owe. However, there are also benefits and credits that are based on your earned income, so it’s essential to understand how it works.

For instance, the Canada Child Benefit (CCB) is a tax-free monthly payment that is based on your family’s net income, which includes your earned income. If you have children under 18 years of age, you may be eligible for the CCB, and the amount you receive will depend on your family’s income.

Another benefit that is based on earned income is the Canada Workers Benefit (CWB), formerly known as the Working Income Tax Benefit (WITB). The CWB is a refundable tax credit designed to help low-income workers. If you have a job and a low income, you may be eligible for this credit.

If you’re self-employed, earned income is even more critical. You must report all of your earned income on your tax return, including income from freelance work, contract work, or any other form of self-employment. You can also claim deductions for expenses related to your self-employment, which can help lower your tax bill.

In summary, earned income is the money you make before taxes and other withholdings are taken out. It is important because it determines how much tax you owe and also affects your eligibility for certain benefits and credits. If you have any questions about earned income or your tax situation, it’s best to consult with a qualified tax professional.

Remember that understanding your earned income is just one piece of the puzzle when it comes to your taxes. There are many other deductions, credits, and rules to consider. If you’re unsure about any aspect of your taxes, it’s always best to seek advice from a professional.

We hope this article has provided you with a better understanding of earned income and its importance in the Canadian tax system.