Are you a first timer joining a job in Canada? Well, it can be a tricky situation at times, because mainly because the tax laws can change from time to time, and it can have a direct effect on your tax situation. So, through Taxback.com, we are giving you 5 tips to keep in mind to safeguard your tax situation while starting a job in Canada.
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Understand your documents well
These are some of the most important documents you need to know about:
TD1: This is your Personal Tax Credits Return which is used by payroll in order to know your tax credits and deductions. Most of the times, employers demand completed TD1 forms before starting a job in Canada. It can be updated at any time of the year.
T4: This is a summary document which shows your income earned and tax deducted in a particular year, which is from January 1st to December 31st. Employers usually give out these forms in February, and you will be using the numbers on this document to file your returns, so please keep it safe.
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Working two or more jobs at a time
If you are employed at two or more places at the same time, do not claim tax credit on both the incomes. Do this only for one job in order to avoid underpaying tax. You can check and update your current TD1 claim at any time of the year.
Eligibility and claiming tax credits
To verify if you are eligible for tax benefit, calculate your earnings from the previous tax year and compare it to your expected income in Canada. If the foreign income is more than 10% of your total income for that year, you should not claim the tax amount on TD1 form.
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For example, you worked in your home country from January 1st to October 31st. You further plan to work in Canada in mid-November. In order for you to claim the personal tax credits, the income you earn from November to December will have to represent 90% of your income for the year. If that is not the case, you cannot claim the credits.
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Try to maximize your refund
Once you earn over the tax-exempted limit, save the receipts and bills for medical, dental and transport expenses so that you can use them for tax return.
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Get professional help for tax returns
If you find tax filing procedure very complicated, you can take help from Taxback.com, which specializes in helping international workers file tax returns. With an average refund of $904, this firm also offers you free estimates, international bank transfers and even a 5% discount on tax return fee if you use the following link to apply.