REGINA -- As the COVID-19 pandemic continues to impact nearly every facet of our lives, it turns out tax season will be no exception.
There are a few tax changes to be aware of that could cost or save you money, depending on what the last year of your life looked like.
IF YOU COLLECTED CERB
For Canadians who collected the Canadian Emergency Response Benefit (CERB), you may owe taxes on the money you received, since those funds are considered part of one's annual income, making it taxable.
Depending on what other income you have coming in, tax experts advise that you may not owe much at all, or warn you may receive a smaller than anticipated tax return.
Chen Xu is a franchisee with Liberty Tax Service in Regina. He oversees the Regina market for the company. He said many will owe more or see a smaller refund as a result of collecting CERB, but not everyone.
“[Collecting CERB] does increase the possibility of owing, but is not always the case,” Xu said. “You have to do a thorough calculation to see how much your income was, how much tax you should pay and how much you already paid.”
However, there’s some good news for those who collected CERB and are concerned about owing a lot in taxes.
HOW AN RRSP CONTRIBUTION MIGHT HELP
If you were able to set aside some CERB funds, placing a portion of it in an RRSP ahead of the March 1 deadline may save you a bit in taxes. Here’s how:
Individuals are taxed on their income from the previous year, which will include CERB if you were a recipient. The amount of funds you put into your RRSP will not be considered part of your annual income, and will reduce the amount of taxable income you report.
“That RRSP amount will be deducted from the income, so your taxable income in less,” Xu said. “It’s kind of tax-deferral, you put that money away and you don’t get taxed on it, later on whenever you take that out you get taxed, less.”
IF YOU WORKED FROM HOME
Another factor brought about during the pandemic was working from home. Parents, in some cases, have been able to cut costs on childcare meaning fewer deductions there. However, you can now claim expenses related to bringing the office home.
There are several options when it comes to claiming work from home expenses. The CRA has introduced an exclusive method where individuals can claim up to $400 in expenses without receipts or a T2200 or T2200S form.
FLAT-RATE METHOD
If you worked four or more weeks at home, for more than 50 per cent of the time, you’re eligible to claim $2 per day up to a total of $400. This option is offered for this tax season only. This aims to cover the approximate cost of work supplies necessary for a home setup, as well as office supplies and phone expenses.
“For the flat-rate they don’t require you to keep any supporting documents, so you basically just count the number of days you worked from home, and then times it by two and that’s your deduction,” Xu said.
The flat rate method does not require a T2200 or T2200S, a form generally provided by the employers outlining a specific directive to work at home. Individuals claiming under this method are not required to calculate the size of your workspace or keep and provide supporting documents such as receipts.
However, if you suspect you spent significantly more than $400 on work from home expenses, it may serve you better to follow the more detailed option.
DETAILED METHOD
This option offers the ability to claim the exact amount spent on work-related expenses, but the individual filing under this method must provide all proof of purchase for items they wish to claim. Individuals must complete a T777S or T777 as well as receive a signed T2200 or T2200S from their employer. Claims can include phone bills, utilities, desks, chairs, office supplies and other office items.