TD1 forms - Make sure they are up to date.
Canada Revenue Agency provides employers with TD1 Personal Tax Credits Return
forms, both federal and provincial. Employees complete the federal form as
well as the form for their province/territory of residence, indicating which non-refundable tax
credits they can claim. The total of the claimable credits is then
used to determine the employee's federal or provincial claim code, which is used
to calculate how much income tax will be deducted from their pay.
New employees complete the TD1 forms when they are hired, and are not
required to complete them again unless they want to change their claim
amounts. Completing the form allows tax deductions to
be reduced if the employee is eligible for tax credits other
than the basic personal exemption. Students can report
their tuition, education and
textbook amounts on this form to reduce their tax
deductions. This form should be filled out when
starting new employment, or when there is a change in your
entitlement to personal tax credits. If no TD1 form is
filled out, the employer will calculate taxes using only the
basic personal exemption.
If you are in a temporary or part-time job, and you know that
your total income for the year will be less than your total personal tax credits
on the TD1 form, you can check the box on page 2 of the form, and your employer
will not deduct tax from your earnings.
The child amount tax credit for dependent children under 18
was new for
2007. Employees with dependent children should file a new federal
TD1 form with their employers to have their income tax reduced. The federal
TD1 form will now have to be changed when an employee has a new baby or adopted
child. Other circumstances could require a change in the federal or
provincial/territorial forms, such as getting married or divorced, uniting with
or splitting up with a common-law spouse, or turning age 65.
If you have employment income, as well as income from sources
where no withholding tax is deducted, such as rental, investment, or
self-employment, you can avoid having to pay tax instalments by indicating on
your TD1 form an additional tax amount to be deducted.
The federal and provincial/territorial TD1
Personal Tax Credits Return forms can be found on the CRA website.
The CRA T4032
Payroll Deductions Tables have tables indicating the federal and
provincial/territorial TD1 claim codes based on the total claims entered
on the TD1 forms.
Commission employees - TD1X form
Commission employees who are able to claim expenses (see
the employment expenses article) can
complete the TD1X,
Statement of Commission Income and Expenses for Payroll Tax Deductions,
so that their expenses are taken into consideration in the calculation of the
income taxes deducted from the commission.
Québec
The Québec equivalent to the TD1 form is the Source
Deductions Return TP-1015.3-V, found on the Revenu Québec website.
Tax tip for employees: Update your TD1 forms if you have
changes to your non-refundable tax credits.
Revised: December 03, 2009
