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Tax Time in the Townships: Pandemic Benefits and Income Loss

It’s getting close to the last day to file your income 2020 tax return. Needless to say, 2020 was not a normal year and many are dreading this tax season more than normal.

Lockdowns, shutdowns, layoffs and working from home have caused many of us to wonder how we will find the money we owe. Not only that, working from home and accounting for any government benefits you received, make filling out a tax return especially difficult this year.

Millions of Canadians will have to include any emergency government benefits they received as part of their tax filings. If you applied for and received a Canadian Emergency Response Benefit (CERB), you have to report it on your tax return and pay taxes on it. The good news is that if you received a CERB payment and grossed less than $75,000 last year, you get a one year interest-free period on the tax owing on the benefit income.

For those of us who worked from home during the pandemic, we can claim work-related expenses of two dollars a day for every day worked from home, up to a maximum of $400 (200 days). Filing your tax return gets a lot harder if your expenses from working at home were higher than that.

If you think your expenses from working at home were higher, you will have to coordinate with your employer to get a signed T2200 form and calculate your expenses that were work related. Usually this entails calculating the percentage of your home used for work and prorating rental/mortgage expenses, utilities and the like on your return.

Last year, about 90% of tax returns were filed online and the CRA is encouraging all Canadians to use e-filing again, as filers receive refunds faster and maintain physical distancing.

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