It’s everyone’s favourite time of year: tax season! Are you ready to file your 2020 taxes?
As a virtual accounting firm, we field many questions from our clients around this time of year. And in 2021, we’ve been getting even more tax questions than usual!
With the pandemic still a significant factor in our lives, many have asked how it will impact their taxes. The existence of the CERB and other emergency benefits have complicated things somewhat, but that’s why The Number Works is here to help!
Here are some of the things you need to know about filing your taxes in 2021.
For many in Canada, the Canadian Emergency Response Benefit (CERB) and other programs, e.g. the Canada Emergency Student Benefit (CESB), were incredible lifelines to help them financially navigate the pandemic. With COVID-19 closing down many businesses, CERB provided more than $81 billion in payments to out-of-work Canadians—but how are you supposed to account for this money in your taxes?
The first thing you need to know is that taxes weren’t withheld when CERB or CESB payments were issued. That means you will need to account for those taxes in your upcoming return. However, unlike with CERB and CESB, 10% taxes were withheld at the source for many other forms of emergency assistance, including the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and Canada Recovery Caregiver Benefit (CRCB).
If you received any emergency benefits in 2020, you should be receiving a T4A (issued by the CRA) and/or a T4E (issued by Service Canada) tax slip(s) in the mail. The information contained in these slips must be entered on your return. If you did not receive these slips in the mail, they should also be available in your online CRA account.
Depending on your situation, there’s also the chance that your emergency benefits might be exempt from taxes, or that you might be able to claim a refund. If you have any specific questions about how emergency benefits will impact your taxes, we invite you to contact us ASAP.
New Benefits and Support
With the significant changes to Canadians’ work statuses in 2020, the government has put new benefits and support structures into place that could impact your 2020 taxes.
For example, home offices have certainly become more popular in the last year. With this in mind, you might be eligible to claim home office expenses on your tax return. We can help you figure out the exact benefits you qualify for, minimizing your tax bill.
If you have any questions about other potential benefits, please don’t hesitate to get in touch with us!
Inaccessible CRA User Accounts
Due to online security concerns, the usernames and passwords of a number of CRA online accounts have been revoked. If you are among the people affected by this, you should have received a notification from the CRA informing you about your account’s status.
Please keep in mind that there are always CRA scams circulating, so if you receive a notification, do NOT share account information with anyone over the phone or through email. Instead, go to the CRA website directly to take steps to recover your account.
Fortunately, the current status of your CRA online account will not impact your ability to file your income taxes using a NETFILE-certified method. However, as your account can contain important tax information, such as your T4 slip, you should take steps ASAP to resolve the situation if you find yourself locked out of your account.
Here are some important dates that you should keep in mind:
April 30th: The personal income tax filing due date for those who are NOT self-employed. Taxes payable due for both individuals and those who ARE self-employed.
June 15th: The personal income tax filing due date for those who ARE self-employed. (Note: Taxes payable are due on April 30th.)
June 15th: Deadline to file GST/HST returns for self-employed annual filers with December 31st, 2020 year-end.
Please keep in mind that, unlike last year, tax deadlines have not changed, and there do not appear to be any plans for extensions. Therefore, putting off preparing your tax returns could result in late fees or penalties.
Working with The Number Works
We fully understand that dealing with your taxes this year might be significantly more stressful than usual. That’s why we are dedicated to making the process for our clients as smooth as possible!
If you are a current client of The Number Works, we ask you to fill out our Client Tax Questionnaire. Please include your full name and SIN in your answers. This questionnaire includes essential information related to COVID-19, so we must receive it as soon as possible. Submissions are due before April 15th so we can meet the April 30th tax deadline. If your questionnaire is not completed before this date, we cannot guarantee that your taxes will be filed on time.
If you aren’t currently a client of The Number Works, we invite you to contact us today! Whether you need help with your personal income tax or your small business, we’d be thrilled to help you get your finances in order and ensure you get every COVID-19 benefit and credit currently available to you!