Filing an income tax return can be a tedious task to make. However, it is mandatory for us Canadian citizens to file it before the deadline.
One of the most important things that you should know is the T1. It has several elements in it that you should get familiarized with as well.
The Elements
To give you an insight into the elements that comprise T1. This will help you out in case you encounter this form in the future.
Information
You can find the basic data located such as name, address, marital status, SIN as well as the spouse’s name.
Overall Income
A tally of the income that you have accumulated for the span of 1 year. This comprises of the following:
- Income from your job: If you have a work in the past year, you might have a T4 slip that is coming from your employer. It lets you view the total income you have acquired from working there. In case you have multiple employers, you will need to have a T4 for each of those employers. The complete info of your taxes that are fulfilled by your employer is also indicated in the T4.
- Income from business: Even if you are not employed in a company but earning money in a business or in freelancing, you are required to file taxes as self-employment income.
- Pension income: Once a citizen retires from the job, a pension will start to come in as the source of income. It might come from Canada Pension Plan or Old Age Security. T4A slips such as P and OAS will be handed out by the government.
- Investment income: If you have investments present then this is the one applicable for you. This is comprised of dividends, bank accounts, capital gains, etc. The place where you invested your assets will be the one to hand you out the tax slips and after that fill out another form with the info that you will need in your tax return submission.
Net and Taxable Incomes
Deductions and credits are present to help you lessen the taxable income that you can file. You can usually find the following on this particular matter:
- Contributions from pensions: In case you are a part of the company’s registered pension plan, the company might already deduct taxes on your salary regularly. All of the contributions that you have accumulated throughout the year will be minus your overall income. The details will then be indicated on the T4 slip.
- Registered Retirement Savings Plans: The contributions from this urge you to gather funds that can be used when you retire from service. This is done by making this contribution a deductible one. The good thing about this contribution is it is free from tax. You can think of its benefit as a refund. The income that will come from investments is not taxed prior to the withdrawal of funds. The financial institution will issue a tax slip to back the deduction up.
- Expenditures for child-care: If someone looks after your child and the person lives in your place for you to have time to work or study could help you lessen the taxable income that you may have.
Furthermore, once the money has already been deducted from the overall income, this is where the net income will show up. Below your net income, you will be able to see the various deductions. But the most important to know is not all taxpayers will be able to avail these deductions.
Refunds
In this part of the form, you will need to indicate the federal taxes amount then put the provincial/territorial taxes on top and total it afterward.
In case you have a job in the previous year, your company will need to put deductions on the total salary indicated on your paycheck. Hence, it must have a year of coverage on the income taxes that you must shoulder.
The government will receive the amount that will be sent out by the company that you are employed. You can eventually view the withheld amount on your T4. There will be a deduction on the initial amount of the tax that you owe with its results. Once you are having a negative figure, it only entails that you have paid more taxes than it is supposed to. As a result, a refund will be issued to address this concern.
Recap
There are different elements that comprise an income tax return. You must be aware of what you can find on the income tax return for to ensure that it is properly filled up. This will save you a lot of time from repeating things all over again once the filing takes place.