My client’s son works for a small small plumbing company that never files their T4s on time. The last couple of years they came an entire year late! I do this kid’s return as a courtesy to my long standing client. The first time this happened I advised the client to wait. He was a student at the time and expecting a refund and I didn’t want to guess how much CPP, EI and Tax was withheld. That worked out fine. Then last year I gave my client the same advice. Because he was no longer a student I thought the small salary would trigger the Canada Worker’s Benefit. The kid had no idea how much he made and I didn’t want him to get a huge refund and then have to pay it all back. Well it turns out that advice backfired on me and the kid actually owed. As a courtesy to my client, I covered the late filing and interest fees because it was my advice to wait.
Now we are in year 3 of him working for this company and he also has a second job. How should I handle this? I know that in these situations we are supposed to estimate and include a letter with the return explaining what we have done.
Can I still Efile if I write a letter and attach it to the return? Should I put the “estimate” on a T4 slip or “other employment income”? And should I include the payroll taxes in my estimates? In the past I have not charged for this kid’s tax return. I will of course start charging but what is the appropriate amount? This has been a huge headache!