We don’t complete personal tax returns here at BOIB but we do provide payroll services.
If you are an employee or will be an employee – this post is for you!
When you hire on as an employee, your employee should be requesting that you fill out and provide them with original copies of your TD1 forms. These forms are used by whomever is doing the payroll to determine what deductions to take from your paycheques for EI, CPP & Income Tax purposes. Employers are required by law to deduct and remit to the government these deductions on a regular basis.
If you do not fill these forms out correctly, the person or company providing payroll services may not deduct enough income tax or may deduct too much. Many different things can affect how much tax you should be paying – one of the most common is holding down more than one part-time job.
Each year the Federal & Provincial goverments release tax exemption amounts – this the amount a person can earn before they are required to pay income tax (this is only about income tax – not EI or CPP). In 2015, the Federal amount is $11327 and the BC amount is $9938. You can only claim this deduction once per calendar year. Therefore, when filling out TD1 forms for the first job, you should fill these amounts in on the forms (there are separate forms which look almost exactly the same but one is Federal & the other Provincial). HOWEVER, if you have a 2nd, 3rd, or 4th job, you should NOT be claiming these deductions again. You should be filling in 0’s for the exemption amount and depending on your earnings you can also opt to fill in the box on page 2 of the Federal form to have extra tax deducted.
Remember that it’s the responsibility of the employee to make sure these forms are filled out correctly. Payroll providers do not know your personal circumstances. We don’t know if you’re married, single, divorced, have one child or six, live with your parents, work 12 jobs, etc. We depend on the information you provide to us to determine the proper deductions. And don’t forget that raises throughout the year or changes in your personal circumstances (think marriage, collecting EI, having a baby, etc) can change your tax situation, as well.
Here is a link to the CRA website where you will find downloadable copies of TD1 forms. They even offer worksheets to help you determine the proper amounts to fill in for your situation.
And for heaven’s sake – look at your paystubs! Too many people simply ignore their paystubs each pay period. You should be keeping track of your hours worked and double checking that an error hasn’t occurred in calculating your pay. Mistakes do happen – such is life – and the responsibility is yours to make sure any issues with your pay are caught quickly so it can be rectified.