Form TD1-WS is the official Canada Revenue Agency (CRA) worksheet that accompanies Form TD1, Personal Tax Credits Return. While the TD1 itself is submitted to the employer, the TD1-WS is a calculation tool retained by the employee to determine the correct amounts for tax credits that are subject to income-based reductions. The worksheet is necessary because several personal tax credits under section 118 of the Income Tax Act (R.S.C., 1985, c. 1, 5th Supp.) are not fixed amounts — they are reduced or eliminated entirely when the employee's net income or the dependant's net income exceeds specified thresholds.

The TD1-WS addresses four primary calculations. First, the basic personal amount calculation: for 2024, the maximum basic personal amount is $15,705 for individuals with net income of $173,205 or less, but this is gradually reduced to $14,156 for individuals with net income exceeding $246,752. The worksheet guides employees through the prorating formula for incomes between these two thresholds. Second, the age amount calculation: the base amount of $8,790 is reduced by 15% of net income exceeding $42,335, reaching zero at approximately $100,935. Third, the spouse or common-law partner amount calculation: the basic personal amount minus the spouse's estimated net income. Fourth, the eligible dependant amount calculation: the basic personal amount minus the dependant's estimated net income. A fifth section covers the Canada caregiver amount, which provides $7,999 for infirm adult dependants or $2,616 for infirm children under 18.

Without the TD1-WS, employees with incomes above the reduction thresholds risk claiming incorrect credit amounts on their TD1, which can lead to under-withholding of federal tax and a balance owing when they file their annual T1 General Income Tax Return.

The TD1-WS worksheet is needed whenever an employee's personal tax credit calculations involve income-based reductions that cannot be determined by simply entering the maximum credit amounts on the TD1 form. The most common scenario is an employee whose net income exceeds $173,205, triggering the reduction of the basic personal amount from the maximum $15,705 toward the minimum $14,156. Any employee earning above this threshold must use the worksheet to calculate their prorated basic personal amount.

Employees aged 65 and older whose net income exceeds $42,335 need the worksheet to calculate their reduced age amount. Since the age amount is reduced by 15 cents for every dollar of net income above the threshold, even a modest pension or investment income can significantly reduce this credit. For example, a retiree with $70,000 of combined pension and employment income would see their age amount reduced by approximately $4,150, from $8,790 to $4,640.

The worksheet is also essential when claiming the spouse or common-law partner amount. The claim depends entirely on the spouse's net income — if the spouse earns $5,000, the claimable amount is $15,705 minus $5,000 = $10,705. Similarly, the eligible dependant amount requires subtracting the dependant's income from the base amount. For the Canada caregiver amount, the worksheet helps determine the net credit after accounting for the infirm dependant's income. In all these cases, the worksheet ensures accurate calculations and proper source deductions by the employer, preventing surprises at tax filing time.

The TD1-WS begins with the employee's identification information — full legal name, Social Insurance Number (SIN) in XXX-XXX-XXX format, and province or territory of residence. The province is relevant because while this worksheet calculates federal credits only, it helps the employee understand which provincial worksheet they also need to complete.

Section 1 collects the estimated total net income from all sources for the current tax year. This is the foundation for all subsequent calculations. Employees should include employment income (gross salary minus union dues, RPP contributions, and other deductions), self-employment income, rental income (net of expenses, as calculated on Form T776), investment income (interest, dividends, capital gains), pension income (CPP/QPP, OAS, RPP, RRIF), and any other taxable income. Accuracy in this estimate directly affects the precision of the credit calculations.

Section 2 calculates the basic personal amount using a three-tier approach: $15,705 if net income is $173,205 or less; a prorated amount if net income is between $173,205 and $246,752 (calculated as $15,705 minus [($15,705 - $14,156) x (net income - $173,205) / ($246,752 - $173,205)]); or $14,156 if net income exceeds $246,752. Sections 3 through 6 provide step-by-step calculations for the age amount (base $8,790 minus 15% of income over $42,335), spouse amount (base minus spouse income), eligible dependant amount (base minus dependant income), and Canada caregiver amount ($7,999 base minus excess income over $18,783 for adult dependants). The final summary section totals all calculated credits for transfer to the TD1 form. The employee should keep the completed worksheet with their personal tax records for reference when filing their T1 General return.