What is a TD1 form or “personal tax credits return”?
A TD1 form is a government document that employers use to determine how much tax to deduct from their employees’ income. Organizations are legally required to collect TD1 records so that they can calculate appropriate amounts of tax and make payments to the Canada Revenue Agency (CRA).
You will be asked to fill out a TD1 form by your employer when you start a new job. From that point onwards, you will typically only have to fill out a new form if your eligibility for tax credits changes (such as if you are entitled to new child care or disability allowances).
Neither you nor your employer submits TD1 forms directly to the CRA. Rather, forms are used as internal organizational documents for the purposes of conducting payroll tasks. Employers are responsible for collecting, storing, and updating TD1 forms.
As such, organizations will often use intermediary tools, like PandaDoc, to host a form, provide employees with a secure online portal to complete the form, and store information securely.
The CRA also provides worksheets to help individuals calculate their tax allowances. Not all benefits are stipulated in the TD1, and sometimes it will be necessary to complete additional forms, such as a T1213 when claiming child care and employment expenses.
Do you need to complete a TD1 2020 form?
Your employer will usually tell you if you need to complete a TD1 2020 form. If you start a new job, you will be directed to submit a TD1 as part of the onboarding process.
There are two types of TD1 forms: a generic federal TD1 form that all Canadian employees must fill out, and provincial forms that relate to the tax allowances of specific territories, such as a TD1ON for Ontario. Employees need to fill out both federal and provincial forms.
You should fill out a TD1 form for 2020 if one of the following applies:
- You started a new paid job.
- Your personal tax credit entitlements have changed, for example if you now support children or dependants that you haven’t previously specified.
- You move to a different territory or prescribed zone and therefore are able to claim additional credits.
- You wish to increase the amount of tax you pay on regular earnings.
The final case – increasing the amount of tax you pay on recurrent earnings throughout the year – applies if you have other sources of income. By filling out a TD1 form, you will not have to pay a large lump sum when you declare your total tax amount for 2020.
How do you fill out a TD1 2020 form?
From 2020 onwards, employers should send employees a webpage link where they can download an official TD1 form. They can then print it, fill it out, and send it in (either manually or digitally) to the relevant individual or department. The employer will store its employees’ forms for future use.
Alternatively, organizations have the option to create tailored forms which mirror the government-issued TD1 form. While they must meet certain regulations, employers often opt to produce in-house forms because they can be hosted digitally using a service like Pandadoc and data is automatically stored online on secure servers, where it can be accessed for conducting payroll tasks. For many organizations, this is a faster and more efficient approach.
TD1 forms have simple, line-by-line entry fields for specifying benefit entitlements for the year. CRA also provides worksheets to help individuals complete their TD1s correctly.
Guidance on custom TD1 Forms
General information about TD1 forms
Canada Revenue Agency Homepage
Should you use PandaDoc to create a TD1 2020 form?
Using a service like PandaDoc to create and host an online TD1 form has several benefits. When employees complete a TD1 via a secure digital portal, data will automatically be sent to secure servers, where you can retrieve it for payroll tasks. This completely eliminates the need for manual data entry.
Furthermore, the pre-written template from PandaDoc fulfills the requirements set out by the CRA in regards to identity verification, employee certification, accessibility for CRA officials, and more.
All forms provided by PandaDoc are fully customizable. Subscribe to a free plan today to see how our document management solution can help your business.
What tax credits are individuals entitled to in 2020?
All tax credits for 2020 are included in the TD1 for 2020. It is important to remember that the TD1 form may not cover all possible benefits and, in some cases, additional forms may need to be completed, such as a T1213, T1043, T3012A, etc. All forms are available online.
Here is a brief overview of the main tax credits for 2020:
- Basic personal amount – $13,229
- Caregiver amount for infirm children aged under age 18 – $2,273
- Amount for individuals aged over 65 with net income lower than $38,508 – $7,637
- Pension income amount (maximum claimable amount) – $2000
- Disability amount – $8,576
Students can also claim the total amount of their tuition fees. Income-dependent amounts for individuals supporting spouses and common-law partners, relatives, and infirm dependants over the age of eighteen are also specified.