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Entering Personal Tax Credits and Deductions

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We know entering personal tax credits and deductions can be a confusing topic for many employers, but don't worry—you're not alone!

If you have questions about the TD1 or TP-1015.3-V forms or how to manage them in Humi, this article will explain everything you need to know.

 

Personal Tax Credits & Deductions

All employees are eligible for basic personal tax credits on the federal and provincial levels. This information is commonly collected via a TD1 Form provided by the Canada Revenue Agency (CRA) or the TP-1015.3-V Form provided by Revenu Québec (RQ). We’ll be using the TD1 form in our examples below.

 

Understanding the TD1 Personal Tax Credits Return & the Provincial Equivalent

The TD1 form is a document your employee fills out when they start their new job or when they experience a significant life change that affects their tax situation. It helps you calculate the amount of income tax to deduct from each pay.

It is not the employer's responsibility to fill out this form for their employees; however, you can support your employees by ensuring they understand why they should. It’s also important to encourage employees to review and update their tax forms as needed, especially after significant life changes such as marriage, divorce, or the birth of a child.

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How to Add an Additional Tax Credit or Deduction in Humi

Humi will automatically apply the Basic Personal Amount for both the federal and provincial forms, though remember that this amount can change each year.

If the employee has submitted a Personal Tax Credits Return form claiming an amount other than the Basic Personal Amount, you’ll need to enter this information into Humi manually.

To do this:

  1. In People, use the search bar to find the employee you require and click on their name.
  2. Click on the Job & Pay tab on their employee profile and scroll down to the Personal Tax Credits and Deductions section.
  3. In either the Federal or Provincial section, click the + Add button to open the creation window for personal tax amounts. Screenshot 2024-12-04 at 2.29.26 PM.png
    • If they gave you the Federal form, fill in the amounts in the Federal section.
      • Enter the Calendar Year from the TD1 form provided.
      • In the Total Claim Amount field, enter the value on Line 13 Total Claim Amount from the TD1 form provided.
      • If the employee has entered a value on the form in the field Additional tax to be deducted on the TD1 provided, then enter this value into the corresponding box.
      • If the employee has entered a value on the form in the field Deduction for living in a prescribed zone on the TD1 provided, then enter this value into the corresponding box.
    • If they gave you the Provincial form, fill in the amounts in the Provincial section in the same way as you entered them in the Federal section.
  4. When you’re ready, click the Save button.

That’s it! The tax credit will now appear on the employee’s profile, and it will adjust the amount of tax being withheld for them.

 

Frequently Asked Questions

If they have more than one employer or payer at the same time

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If your employee has more than one employer or payer at the same time and entered a “0” (zero) in the Total Claim Amount field on their TD1 form, then you would enter "0" for the employee’s Federal Total Claim Amount.

If they submitted the provincial form, you should do the same for the indicated amount under the relevant province.

If the employee's total income is less than the total claim amount

If an employee indicates on their TD1 form that their total income is less than the total claim amount, please contact us with the employee's name so we can mark the employee "tax-exempt" via the system's backend.

If the employee requests a "reduction to income tax at source"
Occasionally, an employee may provide you with a letter from the CRA authorizing a reduction to their income tax at source. To learn how to enter this information in Humi, check out this article.
Do employees reporting to an office in Québec need to fill out both the Federal TD1 and the TP-1015.3?
Yes. Employees reporting to an office in Québec should fill out both the Federal TD1 and the TP-1015.3 forms to ensure accurate tax deductions. Both forms are important for ensuring that the correct amount of income tax is withheld from an employee's pay based on their individual circumstances.

 

Additional Information

  • When you enter Personal Tax Credits into Humi, we will apply the tax credits only to the applicable year. For example, Personal Tax Credits entered for 2024 will not be used when calculating a 2025 payroll. Every new tax year, Humi will apply the updated Basic Personal Amounts for all employees.
  • The employee's responsible for letting you know if there are any changes to their personal tax credits.
  • Any changes made in Humi are applied to the next payroll processed.
  • If an employee is unsure how to fill in their personal tax forms, they should contact an accountant for assistance.
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