If you're feeling a little overwhelmed coming into tax season, you're not alone. After two years of COVID regulations and the resulting impact on their financial situations, plenty of Canadians will need support to file their taxes this year.
At times like these, it can help to work with a company that knows the ins and outs of the tax system. With nearly 60 years of experience preparing Canadian taxes, H&R Block can help you file your taxes quickly and accurately — no matter what 2021 threw at you.
Tax Expert Josée Cabral gave Narcity the rundown on what tax season looks like this year, what's changed with the pandemic, and how Canadians can get back every cent that they're owed.
What's Up With COVID-19 Benefits?
Since the start of the pandemic, Canadians have had to make sense of all sorts of COVID-related benefits programs. If you received any financial support from the government in the last few years, it's important that you're aware of its impact on your taxes.
For example, Canadians who received the Canada Emergency Response Benefit (CERB) in 2020 still had to declare it as income when tax season came around the following year.
"When it all began, [...] there was no withheld money at the source for income tax purposes," Cabral told Narcity. "A lot of people weren't expecting it."
You can no longer claim CERB, but there are other benefits you may have received that you'll need to mention when you do your taxes, such as the Canada Recovery Benefit (CRB) and the Canada Recovery Caregiving Benefit (CRCB).
"As of right now, what we're mostly seeing is CRB that was replaced by the Canada Worker Lockdown Benefit," said Cabral.
"So there's a bit fewer surprises this year, although you do still need to expect to pay income tax on those amounts when you file your taxes."
The Canada Worker Lockdown Benefit (CWLB) applies to anyone who couldn't work because their place of business was locked down during the pandemic, as long as they had over $5,000 income in the previous year. Canadians who received this benefit get $300 a week, with $30 withheld at the source for tax.
Some People Will Need To Repay Benefits
If the CRA has found that you were paid COVID-related benefits that you weren't entitled to, you'll be asked to pay them back.
Cabral told Narcity that if you’re in this position, you can choose to adjust your income on a previous tax return instead of paying it all back this year.
"A lot of people are actually choosing to file an adjustment to their 2020 taxes, because that was the year that they received their benefits," said Cabral. She added that this approach can lower the amount of taxes you owe, and may even result in a refund.
"What's great is that the government has given people the option of what year they want to apply it on.”
When you work with an H&R Block Tax Expert, they'll review up to three of your past returns for free to help find money others might have missed. They can also help you find the best year to adjust if you have any repayments to make.
Claiming Work-From-Home Expenses
If you, like a lot of Canadians, spent most of the year working from home due to COVID, you could be entitled to more deductions than you might expect.
There are two ways to claim WFH costs. The first is the flat-rate method, which entitles you to a deduction of $2 per day that you worked from home (up to 250 days or $500).
The second is the detailed method, which takes a little more effort but can get you a larger deduction. It can be helpful to work this out with a Tax Expert, so you don't miss anything.
"What you can claim is basically internet, phone, and if you rent, you can deduct a portion of your rent," Cabral told Narcity. She added that supplies to spruce up your workspace — like cleaning supplies or paint — can also be claimed.
If You Started Working For Yourself
During the pandemic, if you quit your nine-to-five and started your own business, there may be tax benefits and deductions that you can take advantage of.
"There's a lot of expenses that you may have before you even start making an income. A lot of people aren't aware that you can actually file your taxes with an income of zero dollars for your business,” Cabral told Narcity.
If you have started to earn an income, expenses such as employee salaries, office supplies, office rent, vehicle expenses, internet and phone bills can all be deducted from your income when you file your taxes.
One thing to keep in mind is that if your business makes $30,000 or more, you're required to register for GST and HST. Under that amount, you can choose to register if you like, but it's not mandatory.
Cabral explained that, once you’re registered for GST and HST, the tax that you charge your clients is reported in your return alongside the tax that you paid on purchases or other deductions.
"And then the difference of those two amounts is what you owe the government or what they owe you back."
Do It Your Way With An H&R Block Tax Expert
Working with an H&R Block Tax Expert is one way to ensure you don't miss out on anything that you're owed come tax season.
You can arrange a face-to-face appointment to go through your taxes in person, you can drop off your paperwork at an H&R Block office and a Tax Expert will get in touch with you when they're ready to file.
With Tax Experts that are especially good at identifying money you might have missed, H&R Block can help support you this tax season.
H&R Block understands how stressful and confusing tax season can be, especially with all the changes that have happened during the pandemic. That's why their services are designed to get you the biggest refund possible.
This content is for general informational purposes only and does not constitute financial, investment, legal, tax or accounting advice.
This article’s cover image was used for illustrative purposes only.