During 2020 millions of Canadians lost their jobs and receiving Canada Emergency Response Benefit (CERB) or working from home, may bring uncertainty and some doubt about the bottom line of tax return but, to make it stress-free prepare yourself for upcoming expectations. Here’s summary:
Important dates:
• You’ll be able to file your 2020 tax return electronically starting on Monday, Feb. 22 but, make sure you have received all your tax slips before you start filling out your tax.
• For individuals the deadline to file and pay your tax return is Friday, April 30.
• For self-employed and their spouse or common-law partner, the deadline is Tuesday, June 15 to file your return but you must pay off any taxes owing by April 30.
• RRSP Contribution deadline is Monday, March 1.
Tax Tips - What to expect and how to prepare for Tax season 2021
New Tax slips to watch out for:
New Tax slips to watch out for:
• If you were working but you received less than $1,000 in employment income for at least 14 consecutive days, you have been eligible to collect emergency benefits such as CERB and you will see extra boxes at the bottom of your T4.
• For any payments you got from CRA, expect to receive a T4A.
• For any payments you got from Service Canada and not processed by CRA, you’ll see a T4E.
Tax Tips - CERB effect on personal tax returns:
Tax Tips - CERB effect on personal tax returns:
• You do not need to repay CERB and other COVID benefits by the tax deadline if you were eligible but, you have to pay applicable income taxes.
• If you have received benefits and you were not eligible, you will have to return the money to the government but, CRA has not specified when repayments of these benefits are due. Even if you paid back the funds before the end of 2020, any income received will show on your tax slips and you may have to pay income tax on it. This means you will pay tax on the benefit that you have to pay back. You will have to wait until you file your 2021 tax return for CRA adjustment and any repayments made in 2021 will be recognized on a 2021 T4A slip, which you can claim a deduction on 2021 income tax return.
• You may owe more taxes this year because the first round of emergency benefits payments during the pandemic did not have any tax withheld at source. On the second round of benefits in September, the government has been withholding 10 per cent in tax at source but it may be insufficient to cover your tax liability.
Tax Tips - What to expect and how to prepare for Tax season 2021
Afsaneh Zahedikia
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