What Is a TD1 Form and When Should It Be Filled Out?

As we start making plans for how we are going to ring in the New Year, it is a good time to take a moment and consider whether or not you need to fill in a new TD1 Form.

Every employee’s tax circumstances are different, which means the amount of tax that employers deduct from each individual’s pay differs.

What is a TD1 form?

TD1 forms help determine how much tax should be deducted off an employee’s paycheque based on the tax credits and deduction they believe they will receive both federally and provincially.

This is beneficial for employees as it ensures they are paying the most accurate amount of tax possible, minimizing tax owing at the end of the year. In situations where the taxpayer would normally receive a refund, it allows them to access the funds earlier in the year, as opposed to waiting for them as a lump sum come tax season.

TD1 forms are most often used when an employee starts working for the company, however, circumstances change from year to year that can create a need for new TD1 Forms. If a change does happen, the employee must complete the form no later than seven days after the change.

Some examples of changes which should prompt the filing of a new TD1 with your employer include, but are not limited to:

1. A change in marital status.
2. A family member becomes disabled.
3. A taxpayer starts post-secondary school.
4. A taxpayer turns 65.
5. An elderly or disabled parent moves in.

Both the Federal and Provincial TD1 forms list the most common tax credits claimed by taxpayers. If, however, an employee has deductions, such as RRSP contributions, deductible support payments and care expenses, that are not listed on the TD1 Forms, they can still request that taxes are reduced at the source. This can be done by filling out a T1213 Form.

Unlike the TD1 Forms, once an employee has filled out the T1213 Form, they must send it to the Canada Revenue Agency (CRA). After verifying the information on the form, the CRA will send a letter to the employer, authorizing the reduction.

The T1213 process can take time, so the sooner your employee fills out and files the form, the better.

For more information on reducing taxes deducted at the source for employees and employers, contact us today. We would be happy to help you with this and any other tax-related questions you have.