If you are a low-income earner in Canada, you may qualify for the Canada Workers Benefit (CWB), formerly known as the Working Income Tax Benefit (WITB). The CWB is a refundable tax credit that provides financial assistance to working individuals and families. In this blog post, we will discuss everything you need to know about the CWB.
Who Qualifies for the CWB?
To qualify for the CWB, you must meet the following requirements:
- You must be a resident of Canada for tax purposes.
- You must be over the age of 19 and under the age of 65 at the end of the tax year.
- You must have earned income from employment or self-employment.
- You must have a net income below the maximum threshold for the tax year.
The maximum thresholds for the CWB change annually and depend on your family composition. For the 2021 tax year, the maximum thresholds are as follows:
- Single individual with no children: $12,760
- Single parent with one child: $23,915
- Couple with no children: $17,025
- Couple with two children: $36,350
How is the CWB Calculated?
The amount of the CWB you receive is calculated based on your family income, which is the combined income of you and your spouse or common-law partner. The CWB is calculated as a percentage of your working income, which is your income from employment or self-employment.
For the 2021 tax year, the CWB is calculated as follows:
- 26% of your working income if your family income is below $13,194
- 16% of your working income if your family income is between $13,194 and $24,433
- 8% of your working income if your family income is between $24,433 and $36,146
- 3% of your working income if your family income is above $36,146
The maximum amount of the CWB you can receive for the 2021 tax year is:
- $1,381 if you have no children
- $2,335 if you have one child
- $2,804 if you have two children
- $2,969 if you have three or more children
How is the CWB Paid?
The CWB is paid as a refundable tax credit, which means that if the amount of the credit is greater than the amount of tax you owe, you will receive the difference as a refund. You can apply for the CWB by completing Schedule 6 of your income tax and benefit return.
Conclusion
The Canada Workers Benefit is an essential tax credit that provides financial assistance to low-income earners in Canada. If you meet the eligibility requirements, make sure to claim the credit by completing Schedule 6 of your income tax and benefit return. If you have any questions about the CWB or your eligibility, please consult with a qualified tax professional.