Changes for the 2020 Tax Season

With the new tax season and the old news of Covid CRA has provided new rules and guidelines.

If you collected COVID-19-related benefit payments last year, it is possible that you will see yourself owing more money than in previous years. However, if you spent part of 2020 working from home, you could receive a bigger tax refund than usual. With all these new rules we end up giving the same tax advice “it depends”

Deadlines

Let’s step through a few of the bigger points that will have impact to most peoples taxes. Starting with deadlines.

It is important that everyone is aware Canada Revenue Agency (CRA) has not extended the tax filing deadline. Filing your taxes by April 30 for most Canadians, and June 15 for self-employed people. That said you had a total taxable income of $75,000 or less and received one or more of the Covid benefit from the government don’t have to pay their taxes until April 30, 2022.

Here are a few of the most common benefits that qualify. If you are not sure please contact us to make sure that you are entitled to have a full year to pay without penalty. Remember you still have to file on time to avoid a late payment penalty.

• Canada emergency response benefit (CERB).
• Canada emergency student benefit (CESB).
• Canada recovery benefit (CRB).
• Canada recovery caregiving benefit (CRCB).
• Canada recovery sickness benefit (CRSB).

These benefits are considered taxable income. The Canadian government introduced the tax-payment deferral to help out with the tax payments. That doesn’t mean you can file late.

One major change that taxpayers are seeing is the government did not withhold taxes on CERB and CESB benefit payments Canadians received in 2020. The government did withhold 10% tax for people who received CRB, CRCB and CRSB benefits. To confuse matters more most taxpayers are above the 10% tax bracket again there is a possibility you could owe taxes.

Working from Home

Working from home? Setting up a make shift home office on the kitchen table? If you did work from home for part of 2020, as many of us did, you might eligible for a home office expenses tax deduction. This is different than the old home office tax deduction that you could claim before the new COVID-19 allowance. You can still use the old method that involves figuring out what percentage of your household costs such as electricity, rent and internet can be used towards your home office space. You will need a detailed list and all relevant receipts.

The second option is a simplified process to help remote workers that setup home offices for the first time in 2020 the government has setup a temporary flat rate method. It allows home workers to claim a tax deduction of $2 for each day up to a maximum of $400.

To qualify you must have worked from home more than 50% of the time for at least four consecutive weeks within the last year.