Wednesday, October 13, 2010

Ways to reduce withholding taxes withheld from the salary

If you are an employee with periodic salary, your withholding taxes are determined by the information you filled in TD1 Personal Tax Credits Return form. But TD 1 form does not take into consideration expenses listed below.

  • RRSP contributions – other than contributions through your employer
  • Child care expenses
  • Support payments paid
  • Employment expenses
  • Carrying  charges and interest expenses
  • Charitable donations and rental losses
If you incur these expenses and if those are substantial amount, you can complete T1213 Request to Reduce Tax Deductions at Source for Year(s)  form to request CRA to authorize your employer to reduce the withholding taxes. You will less withholding taxes withheld during the year rather than getting a refund when you file your tax return. It is always better to get it during the year than lending an interest free loan to CRA.

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