With the extension of the Canada Emergency Benefits of $2,000 a month, vast numbers of people (that aren’t back to work) are now able to bridge their income for 24 weeks and a total of $12,000.
This is your 10-months notice that you WILL be paying tax on this money. You do on your earnings, on any EI you collected and on these benefits.
If your total earnings this year will be roughly the same, just take last years’ tax return and divide your total income line by the total tax you owed and/or paid. That’ll give you your tax rate. No matter what, it’ll be 20 to 30%. Since there isn’t tax deducted from your Emergency Benefits, you’ll need to be ready. At 20% that will have you owing at least $2,400 in taxes. With 10 months notice, that’s setting aside $120 every two weeks. If you choose to ignore that oncoming train and wait until January, you’ll need to save $600 a month since you’ll only have four months left before it’s due.
Your choice: $120 now or $600 later. But then, “later” don’t complain that you didn’t see this coming!