Does every firefighter eligible for federal volunteer Firefighter’s credit or only those doing some volunteer work?
Only a volunteer firefighter is eligible for the credit; and the credit is only available if they perform a minimum of 200 hours service for their department. If they perform less than 200 hours of service they may still be eligible for the $1,000 exemption if they have that amount in box 87 of their T4 slip. If the VFF has over 200 hours they can choose between the $3,000 credit and the $1,000 income exemption.
A full time firefighter does not qualify for the credit, and generally if you are employed as a full time firefighter your employer will not permit you to be employed as a VFF in another municipality.
Do you know if it is optional to complete the T4 using the Box 87 and reducing Box 14 by that amount for Volunteer firefighters? I have a T4 for a client, where the fire department provided the letter indicating over 200 hours of service was provided, but they have not accounted for the 1000 exemption in Box 14 or included a Box 87 with the 1000.
I am surrounded by six municipalities that all complete the T4 what I consider properly but this municipality some distance from me insists it is optional to report this way. I explained that depending on the particular clients income level one way or the other can be more beneficial but I was not able to get anywhere with it.
It looks to me that yes, it is optional. Also when you enter an amount on the box 87 of T4, it does not trigger any change in the amount owing or refund of taxpayer. unable to find on CRA website, if it is compulsory to report in box 87.
My understanding is if the Emergency Services Volunteer qualifies for the $1,000 exemption the Municipality must reduce the employment income by $1,000 and report that same amount in box 87. The issuer of the T4 slip does not have the option on whether or not to do this; it is the employee that has the option of whether they want to add $1,000 to their income and claim the $3,000 credit or not when they complete their tax return. Depending on their income level and tax bracket, sometimes it is better to not claim the $3,000 credit but use the $1,000 income exemption instead.
Other than lack of competence, the only reason a Municipality would not include the $1,000 in box 87 is if the employee doesn’t qualify for the $1,000 exemption. For instance, if they were also employed full time by the same Municipality in a similar capacity they would not qualify for the $1,000 exemption.
With a properly completed T4 slip TaxCycle does a nice job of automatically adding the $1,000 to the client’s income if you choose to take the $3,000 credit. TaxCycle also reminds you to consider claiming the $3,000 credit if it sees a T4 slip with an amount in box 87.
Just as I thought.
I could not get this idea through to that particular Municipality.
I have a long email chain to support how I am claiming things for the forthcoming review later.
Thanks for the confirmation.