TD1 forms are essential documents. If you’re an employee, you are legally required to complete and submit one. If you’re an employer, you should provide your employees with an official or custom TD1 for the purpose of collecting tax information needed to conduct payroll tasks.
A TD1, which is also known as a Personal Tax Credits Return, is a document issued by the Canada Revenue Agency (CRA). It is used by employers to collect tax information – specifically, tax credit entitlements – so that they can calculate the amount of tax owed to the CRA.
Whenever an organization’s accountants conduct monthly payroll tasks, they will consult the data provided by employees in their TD1s. This data must be stored securely. TD1 forms are submitted to employers, not directly to the CRA. That said, the CRA can request to review any individual TD1, and employers must report any tax credit claims that may be false.
The CRA issues two types of TD1 forms. The federal TD1 form is a standard document that every employee resident in Canada must complete. It covers the whole of Canada and specifies credits that apply to federal taxes.
Provincial forms, which are labeled with additional letters, such as “TD1ON” for Ontario and “TD1NB” for New Brunswick, are used to claim provincial tax credits. The local form you need to complete is determined by where you live, not where you work.
Your employer will need both a federal and a provincial TD1 to calculate your whole tax credit entitlement.
Your employer will likely provide you with a link to the relevant government webpage where you can download a TD1. The CRA advises employers not to provide their workers with paper forms. That said, employees can submit forms either digitally or manually.
Alternatively, organizations can create a custom form and distribute it electronically through an online portal. If you are an employer and opt to take this route, you should ensure that your forms meet certain criteria. In particular, your form must mirror the official TD1 and have a system of verifying the identity of the person completing the form. Confidential employee data must be stored securely in accordance with CRA guidelines.
If you have not been provided with a link and are required to submit a TD1, you can download one yourself from the CRA webpage.
You should fill out a TD1 form if one or more of the following conditions applies:
You should also fill out a TD1 if you decide to pay extra tax on your regular earnings from your primary job. People often choose to do this to avoid owing a large annual tax payment on secondary earnings when they submit their annual return to the CRA at the end of the year.
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If you have received a link to a custom TD1 from your employer, you should fill it out online. Because custom TD1 forms must mirror the official document issued by the CRA, the process should be much the same as described above.
Filling out an official TD1 form is a relatively straightforward process. After downloading the form for the current year from the government webpage, you can either print it off to enter your details manually or complete it online.
All information about tax entitlements is contained within the form itself. After entering your personal information at the head of the form, you should go through each section to see which credits apply to you. Leave sections that do not apply blank. If you need to calculate income-dependent earnings, you will be told to consult the associated TD1 worksheet.
It is also worth keeping in mind that not all tax credits are covered by the TD1. To claim child care expenses, for example, you should download a T1213.
A TD1-WS is a worksheet that accompanies a TD1 form. Like TD1s, TD1-WS documents apply to specific years. TD1s help individuals calculate tax credits that are dependent on income.
For example, the federal TD1 form for 2021 stipulates that you can claim $7,131 if you are over 65 and your net income from all sources will be less than $38,393. If you earn over $38.393, you may be entitled to a partial claim and the TD1-WS for 2021 shows you how to calculate this amount.
Guidance about when to use a TD1-WS is given in the standard TD1 form.