Tax Season Is Here: How to Fill Out a T4 Slip and Get Your Return
Not everyone likes February. It can be cold and snowy, and it is the official start of tax season, so it is easy to see why it may get a bad rap. But the end of the month is also the deadline for Canadian employers to issue T4 slips, and they can lead to a tax refund.
The T4 is the key piece of paper most Canadians need to file their taxes. Officially known as T4 Statement of Remuneration Paid, the slip provides most of the important information for your return. It details how much income tax, Canada Pension Plan (CPP) and Employment Insurance (EI) your employer withheld. Your employer is required to file T4s with the Canada Revenue Agency and mail them to employees by February 28 or face fines.
In Canada, we have a self-reporting tax system, so you are responsible for reporting all income earned during the year. If you worked three jobs in 2012, you need to have three T4 slips for your tax return. Do not file without all your T4 slips, as failing to report income can lead to penalties and reassessments.
Forgetting about a T4 slip can happen, but you need to deal with it even if it is a small amount. You need to file a T1 Adjustment Request to include the late T4 in the right year. Do not wait until the CRA finds out you are missing a T4. Over the summer, the CRA matches T4 slips to tax returns using your Social Insurance Number (SIN), so it will eventually uncover the omission and reassess your return.
If your employer fails to provide you with a T4 slip by the end of February, you can file a report with the CRA. For employers who declared bankruptcy in 2012, the trustee should issue T4s.
Generally, each box on the T4 is associated with a line number on the tax return and a few box numbers are for information only. This means you can always check that the correct numbers are on the right lines, no matter how you prepare your return. You may not want to look at Box 22, as it is the
amount of tax deducted from your paycheque for the year. This number is entered on Line 437. Make sure your SIN in Box 12 is correct. If not, you need to speak to your payroll department.
Your Box 14 should be the biggest number on your slip: it is the amount of money you earned for the year, including any taxable benefits. Taxable benefits could include use of a company car, bonuses or employee gifts.
Most taxable benefits will be totalled in Box 40. So if you enjoyed a Christmas party at your company, you may find a dollar figure in this area if it cost more than $100. It can also include the premiums your employer paid for your provincial plan. Box 40 is already included in your total income for the year, so you do not need to report it separately on your return.
Union dues in Box 44 are a tax deduction, as are any charitable donations made through payroll in Box 46. Make sure you do not forget about either of these deductions since they help lower your tax bill.
If you think there is an error on your T4, you should discuss the numbers with payroll. And if there is an error, an amended T4 must be issued to you. Unfortunately, you cannot just alter a T4, even if you know there is an error. If you cannot get an amended T4, you should file your return with the incorrect T4, wait for your Notice of Assessment and then file a Notice of Objection.
If you do not receive a T4 from your employer, you are still required to report your income as accurately as possible. After requesting the form and exhausting all other possible avenues, file without a T4, using your last paystub or time sheets to report your income and include a note with your tax return explaining the situation.
T4s are critical, as they sum up most of your financial year. While they can appear confusing at first, if you work through each box you should find that everything makes sense -- even if some of the numbers aren't exactly pleasing.
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