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Women and Wealth: the impact of COVID-19 support programs on your tax return

“Before you file your taxes April 30th, make sure you’re up to date on changes to your return,” says Karen Hubbard, Vice-President, Client Advisory Services, Educators Financial Group.

(Reading time: 1:30) 

It’s an understatement to say that 2020 taught Canadian women many new things – new ways to teach, communicate, help your family, use your home. Here’s something else that’s new: changes to your tax return. Before you file, answer the questions below, and understand how your answers could affect your return.

Did you collect pandemic-related benefits during 2020?

Many women did. Stats Canada says that more women are impacted by the COVID-caused recession than men. These benefits may have increased your taxable income. If you received the Canada Emergency Response Benefit (CERB) or the Canada Emergency Student Benefit (CESB), no tax was withheld when payments were issued, and you may owe tax when filing your 2020 tax return. If you received the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), or the Canada Recovery Sickness Benefit (CRSB) 10% tax was withheld at source, but your taxes due might still increase since the marginal tax rate for most Canadians is higher than 10%.

The good news? You may be able to defer the taxes on these benefits until April 30, 2022. To be eligible, you must have received one of the benefits, and have $75,000 or less of total taxable income. You must still file your 2020 return by April 30, 2021. If you owe money and didn’t receive COVID-19 benefits, or earned more than $75,000, you must pay by April 30, 2021 or pay interest.

Did you work from home more?

If you worked from home more than 50% of the time for at least four consecutive weeks, look into the new, home office expenses tax deduction. There are two ways to determine your deduction. The detailed method entails calculating what percentage of household costs can be applied to your home office. You may be asked to provide receipts/documentation. Alternatively, there’s also a new, temporary flat rate method, where you deduct $2 per day if you worked from home. The maximum claim is $400, and no documentation is needed.

Are you receiving the Canada Child Benefit (CCB)?

Be aware that the one-time, $300 CCB increase in May 2020, does not have to be reported. This top-up was based on your 2018 tax return. If you didn’t file in 2018, you may be eligible for retroactive benefits and credit payments. Remember, the only way to receive CCB benefits – such as the additional top-up planned for 2021 of $1,200 per child under 6 in low and middle-income families – is to file your taxes.

Be sure to also cash in on all eligible tax credits that pertain to parents such as the Child Care Expenses Deduction and Child Disability Benefits.

Did you spend some of your COVID time retraining?

The Canada Training Credit (CTC) can be claimed for tuition and other fees paid to an eligible Canadian educational institution for courses taken last year. Eligibility requirements include having been at least 26 years of age and less than 66 years of age at the end of 2020.

Did you know that as an educator, you’re entitled to more tax credits than the average Canadian?

Before you file your tax return, check out our educator-specific tax credits checklist. You can also learn more about what’s new for the 2020 tax year by visiting CRA’s website.

If you’re still unsure about the tax impact of pandemic-related benefits (or whether you qualify for certain credits), be sure to reach out to your accountant or the CRA.

Sources:
https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2021/need-to-know-2021-tax-filing-season.html
https://www.canada.ca/en/services/taxes/income-tax/personal-income-tax/covid19-taxes/interest-relief.html
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-229-other-employment-expenses/work-space-home-expenses/what-changes.html

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