What You Need To Know About Filing Your 2020 Taxes

Posted on: March 17, 2021

by Jenny Reimer, CFP®

What You Need To Know About Filing Your 2020 Taxes

The year of COVID-19 will be a memorable one. It changed many aspects of our lives, from the ways we work and shop to how we support each other. For many, filing your 2020 taxes will also look a little different this year. 

Here is what you need to pay special attention to if you have new income sources to declare, took advantage of COVID-19 government benefits, worked from home or have other expenses to claim due to the pandemic.

Getting Organized

Organizing your tax paperwork amongst all the other COVID-related stresses may feel more daunting than usual. But filing your taxes before the April 30th deadline is important. 

Filing on time will ensure you receive all the benefits you are entitled to, such as the Canada child benefit and the GST/HST credit, and avoid penalties on any amounts owing. 

While the tax filing deadline has not been extended, the government is offering some targeted interest relief on amounts owing. If you had a total taxable income of $75,000 or less in 2020 and received qualifying COVID-related income support benefits, you won’t be charged interest on taxes owing from the 2020 tax year until April 30, 2022. 

If you’re self-employed or have a spouse or a common-law partner who is self-employed, the deadline to file your taxes is June 15th, but all taxes owed must still be paid by April 30th, unless you qualify for interest relief. 

The CRA has compiled some other helpful tips to help you get started on your taxes here.

COVID-19 Related Benefits

In addition to the items listed on our Tax Preparation Checklist, if you received COVID-19 benefits, such as the Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB) or Canada Recovery Caregiving Benefit (CRCB), you will also need to collect a few new tax slips this year. 

  • Recipients who applied for benefits through their CRA My Account or an automated telephone service will receive a T4A slip from the CRA. Québec residents will receive both a T4A and RL-1.
  • Recipients who applied for Employment Insurance (EI) benefit payments or CERB, or both, from Service Canada, will receive a T4E slip (instead of a T4A).

These tax slips have been mailed to you or are available online through My Account. This income is taxable and needs to be reported on your 2020 tax return.

A Note For The Self-Employed

Self-employed individuals who received COVID-19 assistance for their business, such as the Canada Emergency Wage Subsidy (CEWS), generally have to include these amounts in their business income or reduce their expenses by the amounts received. If you received a government loan, the loan itself is not taxable, but you are to include any portion of the loan that is forgiven in your business income.

Working From Home Deductions

If you worked from home due to the pandemic more than 50 percent of the time for a period of at least four consecutive weeks in 2020, you will likely be able to claim a deduction for home office expenses.  

  • If you qualify, you can complete a detailed calculation or use the new temporary flat rate method.
  • Under the flat rate method, you can claim $2 per day for each day worked at home up to a maximum of $400 (i.e. 200 days).
  • You will need a regular T2200 form or a shortened pandemic version (Form T2200S) from your employer to do a detailed calculation. If you use the flat rate method, a T2200 is not required.

New this year is a tax credit of up to $500 for subscriptions to qualifying Canadian media, such as newspapers, magazines, websites and podcasts, that don’t have a broadcast licence and offer primarily original news content. The CRA will post a list of eligible subscriptions on its website in March.

We hope this article helps guide you toward a less stressful and more organized tax season. If you have additional questions regarding how to best manage your cash flow, plan for retirement or improve your overall financial well-being, a Money Coach can help. Our Investment Report Card is also a great option for those of you looking for a second opinion on your investment portfolio.

Category(s): Financial Planning, taxes
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