# TD1: Withholding Tax At Source (Pay Cheque)



## registereduser (Nov 25, 2014)

Hi there,

This forum is awesome, thanks for all the great advice and help you guys kindly share!

I have a question about withholding tax at source (the tax taken from a pay cheque).

If an employee doesn't fill out the TD1 form with their yearly updated information for the different tax credits, are these credits still refunded later when the person submits their taxes in March, or actually these tax credits are "lost"? Basically, if I don't update my TD1 form for this year (a new child... etc.), can I still get these tax credits when I file my annual taxes later?

And does adding this information to the TD1 exclude the person from claiming these tax credits in the annual tax return later? I'm just worried I may be claiming these tax credits twice.

Thanks a lot!


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## Guban (Jul 5, 2011)

Absolutely not! The TD1 form allows your employer to estimate the correct amount of taxes to withhold in order to have the correct ball park, so that when the employee completes his/her tax return, the refund or balance owing is not too much. Many people would be in trouble if they were suddenly handed a big tax bill on April 30th. Getting a big refund then is also not good. The government has had an interest free loan at your expense.

Forgetting credits on the TD1 does not stop you from including them in your tax return. Claim all that you legally can to minimize your tax burden.

Also, don't forget your provincial form. In Ontario, we have an ON TD 1 form to properly estimate provincial taxes to be withheld.


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## registereduser (Nov 25, 2014)

Guban, thanks so much for your excellent explanation! It is really helpful and helped me understand the TD1 much better!

I'm just curious: Because the TD1 is only an estimation of the tax credits you can use in the new year based on your life expectations for this new year (not based on the previous one), what would it happen if you entered a credit (e.g.: tuition expenses) but later in the year you are unable to take that school course you included as part of the tax credit? Would I just have to enter the new correct amount later for that field in my tax return in March or I would also have to amend my TD1 through my employer as soon as I realize I can't take the course? I'm just trying to avoid a penalization from CRA or causing any problems to my employer for claiming a credit too early (only based on life expectations).

Thanks a lot again!


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## Guban (Jul 5, 2011)

registereduser said:


> Guban, thanks so much for your excellent explanation! It is really helpful and helped me understand the TD1 much better!
> 
> I'm just curious: Because the TD1 is only an estimation of the tax credits you can use in the new year based on your life expectations for this new year (not based on the previous one), what would it happen if you entered a credit (e.g.: tuition expenses) but later in the year you are unable to take that school course you included as part of the tax credit? Would I just have to enter the new correct amount later for that field in my tax return in March or I would also have to amend my TD1 through my employer as soon as I realize I can't take the course? I'm just trying to avoid a penalization from CRA or causing any problems to my employer for claiming a credit too early (only based on life expectations).
> 
> Thanks a lot again!


Just get it correct on your tax return. That is where it really counts.
I suspect that CRA won't penalize you if you get it wrong in any case. If your employer doesn't end up taking off enough taxes, you may have to pay by installments. See: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/wh-eng.html . If you are lying on the TD1, that's likely a different issue, and CRA could do something about it, as it has your signature on the bottom line saying that you've been honest.
If your employer ends up taking too much off, nobody complains, and you get the money back at tax time. The government (implicitly) thanks you for the interest free loan.


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## registereduser (Nov 25, 2014)

Thanks so much for the explanation and the link, Guban! You are awesome! Really thanks!!!!


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