TurboTax wants to ensure accuracy with the information we have provided in this article, all content will be updated as we learn more from the Canada Revenue Agency and the Government of Canada.
When situations arise that force us to change our working behaviour, such as being in self-isolation or quarantine due to COVID-19, this may make us feel anxious – which can lead to more questions you might have about filing your taxes this year. Whether you are an employed individual or self-employed, having these questions about filing for 2020 is understandable, so we here at TurboTax want to help answer a few of the most common ones we’re hearing.
What happens if I had to stop working or I was working less?
The federal government introduced some new measures to assist those that had to stop working or were laid off in 2020:
Canada Emergency Response Benefit (CERB): CERB provided a taxable benefit of $2,000 per month for up to 28 weeks to qualifying individuals: workers who lost their income as a result of the COVID-19 pandemic or earned less than $1,000 in a 4-week period. CERB was discontinued on September 26th, 2020, to be replaced with CRB.
Canada Recovery Benefit (CRB): CRB was put into effect on September 27th, 2020, and has similar eligibility criteria as CERB. Although it is a taxable benefit, CRA deducts 10% taxes at source which you can claim as a refundable credit on your tax return.
When you have a decrease in your income, this means that your taxable income is going down. Your taxable income is what determines what rate of tax is used to calculate how much tax you owe. Less employment income will mean less taxable income, and that will be indicated on your T4 slip. If you applied for CERB or CRB, the benefit will be added to your income increasing your tax liability. The CERB and CRB income will be reported on a T4A slip.
CRA will withhold 10% taxes from your CRB earnings and none from your CERB, but this does not cover the first federal and provincial tax bracket. It’s always recommended to save some money on the side in case you are required to pay taxes when you file your income tax return.
I was required to work from home in self-isolation but I needed supplies - can I write those off?
If your employer made the decision to ask employees to work from home, then your work environment changed, and in some cases, what you needed to do your job effectively also changed. In most cases, employers have been making sure employees are outfitted with all the necessary supplies they need for a quarantine period, but there’s always a possibility that you have to get yourself some items while you are away from the office. If you are not provided with an allowance by your employer or they are not directly reimbursing you for those expenses, you may be eligible to claim some of your employment expenses.
Your employer will need to provide you with a completed and signed T2200 – Declaration of Conditions of Employment form. Once you have that, then you are able to complete the T777, Statement of Employment Expenses form, outlining your costs. Make sure you have all of your receipts, and remember - these need to be reasonable expenses.
What if I received Employment Insurance benefits (EI) while I was laid off?
Employment Insurance Benefits (EI) is another type of income that is a part of your total taxable income. You will receive a T4E – Statement of Employment Insurance and Other Benefits that will indicate your EI earnings and all withholding amounts. Similar to CRB, CRA will withhold 10% taxes from your EI earnings.
What if I received CERB or CRB instead of EI?
If you received EI for your job loss, you should not have applied for CERB, CRB, or other emergency benefits. If you have received an emergency benefit by mistake, please call the EI department and request a change in your benefits (1-800-206-7218).
If the mix-up has not been fixed by the time you file your tax return, you’ll report your emergency benefit as indicated on your T4A slip. Keep in mind that you will be required to pay taxes on the full CERB payments since no taxes have been withheld at source.
Do I need to repay my CERB?
For most Canadians, the past year has been difficult enough without having to worry about repaying all that money the government gave you to help you get through these unprecedented times. As of early February 2021, the government announced that those who received the early CERB payments as a Self-Employed Canadian will not have to worry about repayment, as long as eligibility is confirmed. 40% of the Canadian work force - roughly 8 million people - received at least one of the emergency benefit support through CERB, CESB, CRB, CRCB, CRSB, EI or any provincial emergency benefits! Provincial programs to support their citizens during this pandemic will be listed below. This applies to those that requested assistance through the Canada Revenue Agency or through Service Canada.
Your income had to have been $75,000 or less in 2020 or the previous 12 months prior to the date of applying for these benefits.
How do I repay the benefit?
If you find out that you have received a payment that you were not eligible for, you can repay it by either returning it through your “My Account” online, or online banking to “Canada Emergency Benefit Repayment”, or by mailing a cheque to:
Revenue Processing – Repayment of CRB or CERB
Sudbury Tax Centre
1050 Notre Dame Avenue
Sudbury, ON, P3A 0C3
Are my taxes still due at the same time?
Individual tax returns and payments are due on April 30th, while self-employed returns are due on June 15th. In some extreme cases, the CRA might mandate an extension of the deadline; this will be announced by the CRA if/when they make the decision to do so, any given year. Until such time, ensure that you are still completing your taxes by the appropriate deadline, and paying any taxes owing by April 30th.
How can I get my taxes done if no one is working and I use a tax preparer?
The process of completing your income taxes remains the same for the most part. COVID-19 concerns mean limiting contact, which also includes appointments with tax preparers, so you might have to find an alternative to complete your income tax. Many accountant and taxation offices are still completing returns utilizing drop boxes and digital file-sharing to get your documents, with meetings taking place via phone or through an online meeting application. If you don’t want to drop off in-person, there are several tax solutions available to you online.
I think I’m missing some forms for my return, but my employer is now unavailable. How do I get them?
Though it is still your employer’s responsibility to get you your employment tax forms, you do have another option. In your CRA My Account, you have access to all of the tax forms that have been completed and remitted on your behalf, including T4s, T4E, T4Ps, T5s, etc. Some RRSP contributions slips and T3s, may not be available until the end of March, so if you are expecting those, be mindful of when these forms will be available, as you don’t want to file an incomplete return.
I am self-employed and had to shut down for a few weeks so I lost a lot of money - does that change the information I use to file?
Yes, for self-employed individuals, you file an additional form called a T2125 – Statement of Business or Professional Activities to report your business income and expenses, as well as your vehicle use, capital costs and your business use of home expenses. As a business owner, you should be tracking your income and expenses in some type of bookkeeping format. This is very essential so that you can see how your business is doing over a period of time, and it makes tax time so much simpler for you. Any loss in your business income will reduce your tax liability. However, if you applied for CERB or CRB, the benefits income will be added to your total income and thus increase your tax liability.
The federal government introduced some new measures to assist those businesses that have employees:
Temporary Wage Subsidy (TWS): This is a 3-month subsidy on the payment of source remittances, equal to 10% of the remuneration paid, for income taxes withheld from employees and paid to the CRA. This subsidy is taxable income and will require accounting for it in your bookkeeping records.
Canada Emergency Wage Subsidy (CEWS): The Canada Emergency Wage Subsidy (CEWS), provides financial support to businesses that have seen a 30% loss in revenue, as compared to the same time last year, and aims to assist those businesses in retaining their employees or even re-hiring those they’ve laid off. This subsidy is taxable income and will require accounting for it in your bookkeeping records.
How do I report the benefits on my income tax return?
As mentioned above, you will be receiving a T4A slip reporting the different types of benefits you have received. On your income tax and benefit return, report on Line 13000 – Other Income the following income:
● Box 197 – Canada Emergency Response Benefit (CERB)
● Box 198 – Canada Emergency Student Benefit (CESB)
● Box 199 – Canada Emergency Student Benefit (CESB) for eligible students with disabilities or those with children or other dependents
● Box 200 – Provincial/Territorial COVID-19 financial assistance payments
● Box 202 – Canada Recovery Benefit (CRB)
● Box 203 – Canada Recovery Sickness Benefit (CRSB)
● Box 204 – Canada Recovery Caregiving Benefit (CRCB)
We’re Here to Support You
If the thought of these changes is overwhelming, Turbo Tax is here to help. To make tax season as simple as possible, TurboTax and Sonnet have created solutions that work for all situations and preferences, including:
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Please visit http://turbotax.ca/sonnet for discounted TurboTax products and virtual access to real tax experts.
For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, visit this TurboTax link on all COVID-19 response measures.
See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.
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