How to fill out TD1 form if you have two jobs

Navigating the TD1 and TD1-ON forms is important if you've secured a second job in the same year.

Each tax season, my phone rings with familiar stories of unexpected tax bills. Somebody who took on two jobs last year to earn extra income, only to be blindsided by an unexpected tax bill from CRA due to filling out their TD1 forms wrong.

The basics:

The TD1 is for federal taxes, and TD1-ON is for (Ontario) Provincial taxes.

These forms are used to determine how much income tax is deducted from your pay cheques.

The forms do not impact how much tax you actually pay on your annual income at the end of the year. They only impact the deductions on your cheques.

If you have multiple jobs, on the TD1 forms, page 2, you must check "More than one employer or payer at the same time” box and leave the credit amount lines blank and enter “0” for your Total Claim amount. This is because you’ve already claimed your credits on your first job, and there’s no need to do it twice.

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Some more to keep in mind:

1. Basic Personal Amount: This is a non-refundable tax credit claimable by everyone. If you have multiple jobs, claim this amount only at one job per year to prevent underpayment of taxes.

2. Know Your Combined Earnings: Especially with multiple jobs, it's crucial to tally your total income for the year. Earnings beyond the basic personal amount come with different tax implications.

3. Securing a Second Job: If you've secured a second job in the same year, here's a simple approach:

• On the TD1 form, enter zeros for both the basic personal amount and the total claim amount.
• Check the box on page 2 indicating you have more than one employer in the year.

Note: While this method results in higher tax deductions from your pay (meaning less take-home pay), it ensures you're being taxed adequately. Think of the higher deductions as a mini savings account, where you might receive a refund at the end of the year.

4. Proactive Tax Deduction: If you're wary of potential taxes, consider instructing additional tax to be deducted on the TD1's second page. A little foresight can prevent future shocks.

5. Stay Updated: Tax brackets and personal situations always change. Ensure you review and adjust your TD1 forms yearly, at least, especially if there are shifts in your income or employment status.

When in doubt, always consult a tax professional.