If you have low-income clients, you may want to talk with them about the Working Income Tax Benefit. This refundable credit puts money in their pockets, and they may even be able to claim advance payments so they don’t have to wait for tax time.
Who Is Eligible?
To claim the WITB, your client must be a Canadian resident age 19 or older. People under age 19 may be eligible if they have an eligible spouse or dependant. To be considered an eligible spouse, the individual must be married or in a common-law partnership with your client on the last day of the tax year. They must also be a Canadian resident, and they can’t be in prison. Additionally, if they’re a full-time student, they don’t count as an eligible spouse unless they have a dependant. An eligible dependant must be under age 19 and live with your client.
What Are the Income Requirements?
To claim this credit, your client must have working income. That includes income from a job or self-employment. It usually does not include government benefits or investment income. As of 2017, families throughout most of Canada can claim the WITB if their income is less than $28,975. Single people without children can only claim it if their income is less than $18,792. But the income thresholds can vary based on your client’s province. For example, families with or without children in Nunavut can claim the WITB if they earn up to $45,054. In contrast, in Quebec, single individuals with children only qualify for the WITB if their income is below $17,212. In all cases, the income thresholds are slightly higher if your client also qualifies for the disability amount.
How Do You Calculate the WITB?
The exact calculation for this benefit varies based on your client’s province, and the calculation also takes into account their marital status, net income, and number of dependants as well as a few other factors. For example, as of 2017, the maximum benefit for a family in British Columbia is $1,903, but in Nunavut, the maximum benefit is only $1,310. That said, the federal government announced plans to expand this benefit in early 2018.
How Do You Claim the WITB?
To claim this benefit for your clients, you need to complete Schedule 6, Working Income Tax Benefit. The schedule varies slightly depending on your client’s province. Then, you need to transfer the applicable numbers to line 453 of your client’s income tax return.
If you’re filing tax returns for a married couple, you can only claim the WITB for one spouse. If one spouse is eligible for the disability amount, they should claim the WITB, but if both spouses are eligible for the disability amount, you can choose which spouse claims the WITB.
Additionally, only one person can claim a dependant on their return. If you are filing a tax return for someone who has joint custody of a child, make sure you know which parent is claiming the dependant so you don’t accidentally make a double claim.
How Do You Get Advance Payments?
If your clients want advanced payments, you can make a request using Form RC201, Working Income Tax Benefit Advance Payments Application. This needs to be submitted by Aug. 31, but it’s usually easiest to submit it along with your client’s tax return. Advance benefits come once a quarter. Your clients get about half of their WITB in these payments and the rest when they file their tax return.
As of May 2018, only about 85% of eligible workers claim this benefit, and government officials speculate it’s because taxpayers who file their own returns don’t know or remember how to claim the WITB. By pointing your clients in the right direction, you make yourself more valuable as their accountant.