What is a Schedule 1 Federal Tax Form?
CRA Schedule 1
A Schedule 1 Federal Tax Form, or a CRA Schedule 1 as some people call it, is used to calculate the percentage of your income you are going to pay as taxes. If you are looking at your tax return, it is step five in the process of completing that return.
In addition to calculating the amount of taxes you are going to pay, a CRA Schedule 1 also calculates the tax credits that you are entitled to. Following the calculation of these tax credits, the CRA Schedule 1 will come to the ultimate amount that you will owe the CRA in taxes.
The above does not pertain to Quebec, or to non-residents of Canada for tax purposes.
What are Non-Refundable Tax Credits?
Non-refundable tax credits are amounts that are used to offset what you might owe in taxes. Tax credits are calculated once your amount owing has been finalized. These are different from deductions because deductions lower your taxable income. An easy way to remember the difference is if you have $100 of credits, you pay $100 less in taxes. If you have $100 of deductions, you would have $100 less of income, so perhaps you would get $20-$50 removed from your taxes.
All taxpayers may claim a basic non-refundable tax credit for their income tax, known as the personal amount. The caveat, however, is that you must have income in order to benefit from this. This is because it cannot be used to create or increase your refund.
The tax credit that can be claimed is adjusted annually to allow for inflation. In 2017, the personal amount for federal taxes was $11,635. While each government allows taxpayers to claim a percentage of their non-refundable total tax credits, and reduce their taxes payable by that amount, the federal government only allows a maximum of 15% to be claimed.
For example, if a taxpayer had a taxable income of $40,000 in 2017, the federal income tax one would pay on this income is $6000. The tax credit for the federal personal amount is $11,635, and the taxpayer can claim 15% of this, or $1,745.25. This tax credit would thus reduce the federal income tax payable to $4254.75.
CRA Schedule 1 and Tax Credits
CRA Schedule 1 of the T1 tax return lists the non-refundable federal income tax credits that you may be eligible for. Additionally, people in certain categories are entitled to additional personal exemptions.
For example, on your 2017 federal income tax return:
- If you are over the age of 65, you can claim up to $7,225;
- If you have children, you can claim $2,150 for each child under the age of 18;
- If you have a disability, you can claim up to $8,113; or
- If you earned income from a job, you can claim up to $1,178.
To ensure that you are able to maximize the tax credits that are applicable to you, and that you do not miss any deductions or credits you deserve, feel free to contact us to set up an appointment and discuss your return. Do not risk an opportunity to minimize the taxes you owe!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.