Deducting Income tax

Question 1

Is there an age limit for deducting INcome tax?

Answer 1

no age limit

Question 2

Is there an employer contribution?

Answer 2

no

Question 3

What are the forms available to help determine how income tax to deduct

Answer 3

1) for most employees a TD1 (personal tax credits return)
2) employees who are paid commission and who claim expenses may choose to fill out a TD1X (statement of commission income and expenses for payroll tax deductions)

Question 4

What are the two types of TD1?

Answer 4

1) Federal

2) provincial or territorial

Question 5

who must fill out at TD1?

Answer 5

anyone who receives salary, wages, commissions, employment insurance benefits, pensions, or other remuneration

Question 6

What happens if more than basic amount is claimed on the TD1?

Answer 6

they must fill out the provincial TD1

Question 7

When should an employee complete a new TD1?

Answer 7

within 7 days of any change that may result in a change to their personal tax credits for the year

Question 8

What if the employee has more than one employer at the same time?

Answer 8

they can only claim it for one place

• check box more than one employer on page 2
• enter 0 on page 1 on line 13
• do not fill out any numbers from 2 - 12

Question 9

What happens if an employee does not complete new forms

Answer 9

may be penalized $25 for each day the form is late

• minimum penalty is $100
• maximum penalty is $2,500

Question 10

When do employees not need to fill out a new TD1?

Answer 10

if their personal tax credit amounts have not changed for the year

Question 11

Do you need to have a completed TD1 on file for every employee?

Answer 11

yes, the government may ask to see it

Question 12

What are claim codes?

Answer 12

the total amount of personal tax credits an employee claims on TD1 will determine which claim code to use
- see payroll dedutions tables (T4032)

• in some case you will use one claim code for federal and one for provincial

Question 13

What is a form TD1X

Answer 13

statement of commission income and expenses for Payroll tax deductions

Question 14

are there more than one TD1x forms (ie one for federal one for Provincial? )

Answer 14

no, there is only one form

Question 15

on the TD1x, how do they estimate their income and expenses?

Answer 15

by using one of the following two figures
1) their previous year’s figures, if they were paid by commission in that year
2_) the current year’s estimated figures

Question 16

employees who choose to fill out FM TD1X have to give you the form by when?

Answer 16

by one of the two dates;

1) on or before Jan 31 if the worked for you last year
2) within one month of the date their employment starts
3) within one moth of the date their personal tax credits have changed
4) within one month of the date any change occurs that will substantially change their estimated remuneration or expenses previously reported

Question 17

if an employee wants to not use the TD1x and they already filled one out what do you do?

Answer 17

they need to provide you in writing the election they have made

Question 18

if an employee is paid on commission or receives a salary plus commission, you can deduct tax in one of the following ways what are they

Answer 18

1) employee who earns commission without expenses

2) employee who earns commission with expenses

Question 19

How do you deduct income tax for employee who earns commission without expenses

Answer 19

• if you pay commissions at the same time you pay salary, add this amount to the salary, then use the payroll deductions online calculator (PDOC) or other methods to determine it
• if paid periodically commission, may want to sue the bonus method to determine the tax to deduct form the commission payment (pg 30)

Question 20

How do you deduct income tax for employee who earns commissions with expenses

Answer 20

-can use the PDOC or other methods

Question 21

for employees who claim expenses on their income tax and benefit return must have their employer complete what form

Answer 21

T2200, declaration of conditions of employment

Question 22

what are the most common remuneration subject to income tax

Answer 22

1) salary, wages, bonuses, cmmissions, taxable stock option benefits or other
2) most cash and non-cash taxable benefits and allowances
3) remuneration received while on vacation (vacation pay)
4) pensions, retiring allowances (also called severance pay)

Question 23

what amounts do you reduce remuneration paid before calculating income tax

Answer 23

1) a deduction for living in a prescribed zone
2) amount that a tax service office has authrotized
3) employee’s contributions to a registered pension plan (RPP) for details see page 29
4) union dues`

Question 24

David is paid weekly (52 pay periods per year)
basic salary is $500.00
taxable benefits = $50.00
RPP contributions = $25.00
Union Dues = $5.50
living in a prescribed zone = $ (8.25 / day x 7 days) = $57.75
what is remuneration subject to tax deductions at source

Answer 24

basic salary $500
plus taxable benefits $ 50
gross remuneration $550

minus weekly deductions for
RPP contributions $25.00
Union Dues $5.50
living in prescribed zone $57.75
total of $88.25

total remuneration subject to tax deductions = $461.75

Question 25

What is the income tax rates for 2014 (tax brackets and rates)

Answer 25

??