How Covid-19 and CERB Will Affect Your 2020 Taxes in Canada

Daneille Mattis

 



KEY TAKEAWAYS

 

✔ Covid-19 emergency and recovery benefits are taxable, and have to be reported on your return.

✔ Employees who worked from home because of the pandemic can claim a deduction for home office expense.

✔ The deadline to file your taxes this year is still April 30, 2021, unless you’re self-employed.


Have questions about your taxes this year? You’re not alone. Tax season can be stressful for Canadians, and 2020 was anything but a typical year—there were temporary changes and new programs that may impact your personal return, making the filing process a little more complicated than usual.  

Luckily, getting it done right is just a matter of knowing what’s changed this year, making sure that you’re maximizing your deductions, and correctly inputting your income and benefit information.  

From short-term unemployment and Covid-related benefits to home-office expenses and other new tax considerations, here’s everything Canadians need to know before the 2020 tax deadline. 

 

Will the tax-filing deadline be extended this year because of Covid-19?

The deadline to file your 2020 taxes is still April 30, 2021—there are no extensions this year. The only exception? If you or your spouse or common-law partner are self-employed, you have until June 15 to file, but any payments are still due by April 30. 

 

What new deductions are available for 2020? 

If you’ve been working from home because of the pandemic, there are new ways that you can claim your home workspace on your taxes, so long as you meet a few requirements:

  • You must have worked from home during 2020 because of Covid-19, or because your employer required you to
  • You worked from home more than 50% of the time in 2020, for a period of at least four weeks in a row.
  • The expenses you’re claiming are actually used in your work.

If that’s you, then you can use the new temporary flat-rate method to claim your home-office expenses. This streamlined method keeps things simple with a refund of $2 for each day you worked from home, up to a maximum of $400 for the year.

But if you’d rather claim every single home-office expense, you can still use the detailed method to claim. This means you’ll have to get your employer to sign Form T2200S or Form T2200, and calculate your actual home-office expenses (here’s a complete list of what you can and cannot claim). 

Also, if you paid for certain Canadian digital news subscriptions, you can claim a tax credit of up to $500. 

 

Are Covid-related benefits taxable? 

Yes, to the surprise of many Canadians this past year, any Covid-19 emergency or recovery benefits you received in 2020 are taxable. That means you’ll have to report them on your return, although the tax rate will vary depending on your total taxable income last year.

Keep in mind that some benefits were already taxed 10 percent at source, while others, including the Canada Emergency Response Benefit (CERB) and Canada Recovery Sickness Benefit (CESB), did not have any taxes withheld, meaning you’ll have to pay those taxes after filing.

To avoid similar shock next year, keep in mind that the same tax consequences apply to the current crop of benefits, including the Canada Recovery Benefit (CRB), which applies to those who don’t qualify for employment insurance; the Canada Recovery Caregiving Benefit (CRCB), which was created for those who can’t work while caring for a sick family member; and the Canada Recovery Sickness Benefit (CRSB), which is for anyone who can’t work while self-isolating because of Covid-19.

But there is some good news: if you received any Covid benefits and your total taxable income was $75,000 or less in 2020, you’ll have until April 30, 2022, to pay any taxes owing.

 

How do you report Covid benefits on your tax return?

If you received benefits, the Canada Revenue Agency will send you a T4A slip outlining the exact amount you received in 2020. Each benefit has its own box number on the slip, and you’ll need to enter the total amount on Line 13000 (Other Income) on your return.

That said, if you received CERB from Service Canada (instead of the CRA), you’ll get a T4E slip, which you’ll have to report on line 11900.

 

What if you received a benefit you weren’t eligible for?

If you applied for a Covid-19 emergency or recovery benefit and received a payment in error—or if you later realized that you weren’t eligible, you’ll have to repay that amount. You can also return the original cheque to the government if you haven’t cashed it.

For each benefit, including CERB, the CRA has detailed instructions for making repayments available on it's website.

 

We’re here to help

Need more help navigating the ins and outs of Covid-19 and your finances? Check out the free resources in our Covid-19 Resource Centre at goeasy academy.

 

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