Taxpayer alert: Keep more of what you earn in 2012

Start the tax year 2012 on the right financial footing: keep more of what you earn by carefully completing the TD1 Personal Tax Credits Return released last week by the Canada Revenue Agency (www.cra-arc.gc.ca/formspubs/frms/td1-eng.html).

The TD1 determines the amount of personal income taxes that will be deducted from your employment income, or other income such as pension income, received after Jan. 1, 2012. There are federal and provincial/territorial TD1s.

You should also review the tax credits portion of the TD1, particularly in light of the new $2,000 Family Caregiver Tax Credit, available starting in 2012. A new worksheet for computing the Age Amount, Caregiver Amount and Amount for Infirm Dependents accompanies the TD1 for these purposes. Of particular interest:

∑ Age Amount: The maximum credit is $6,720 in 2012 and this amount will be reduced when individual net income exceeds $33,884 in that tax year.

∑ Caregiver Amount and Amount for Infirm Dependent age 18 and older: A new calculation arises when a dependent is infirm, to account for the $2,000 increase. The CRA defines "infirmî as: A mental or physical infirmity such that the person is likely to be dependent on others for his or her personal needs and care for the long term, and needs a full-time attendant, as certified in a letter from a medical practitioner.

Talk to your tax professional and your payroll administrator. It is up to you to complete your TD1 as soon as possible and give it to your employer.