Tax Season in the Age of COVID-19
What’s New for 2020?
Income Tax Filing and Deadlines
From the CERB benefit to working from home, the events of last year have left many Canadians wondering what their taxes will look like this season. We had our Group Retirement Consultant, Chris Santos, CFP, RPA, take the time to clarify and simplify this year’s tax changes.
Be on the Lookout for New Tax Slips
As we move towards the tax return deadline of April 30, 2021 (for employees) and June 15, 2021 (for self-employed), you should have already received your T4 form from your employer, RRSP contribution slips for time periods of March 1-December 31, 2020 and January 1-March 1, 2021, as well as any charitable donation slips if made during 2020.
You may also be wondering why you received a T4A or a T4E this year. If you received support benefit payments due to COVID-19, you would need to include that income on your tax return as it is considered taxable.
The Work from Home Era
During the first wave of the pandemic, many Canadians had to shift from going into the workplace every day to working from the comfort of their own home. For some, this continued for the entire duration of the year. With this, the Government of Canada made changes to the employment expenses, including expenses for a home office. The Canada Revenue Agency (CRA) announced two methods for claiming home office expenses from 2020 – the new temporary flat-rate method and the detailed method.
Temporary Flat-Rate Method
You are eligible to use the temporary flat-rate method if you worked over half of your time from home with a period of at least four consecutive weeks due to COVID-19. You can claim $2 for each day you worked from home to a maximum of $400. If you are using this method to claim your work from home expenses, you do not need to determine the size of your workspace, nor is it required for your employer to sign any tax related forms. For eligibility details on temporary flat-rate method, visit the Government of Canada website.
Sharing a Workspace with a Family Member?
You can both claim the space without having to divide the amount between the number of people sharing.
Detailed Method
If your expenses exceed the maximum claim amount of the method, you should consider using the detailed method. Using this method, the claim amount is calculated by the size of your workspace and the percentage of use. You will need to provide supporting documents for the claim along with a completed and signed Form T2200S/Form T2200 from your employer. For additional eligibility criteria on the detailed method, visit the Government of Canada website.
Sharing a Workspace with a Family Member?
With the detailed method, you must divide the workspace based on the space used by each person.
Make sure that you seek the expertise of a tax professional to assist you. If you have a simple tax return, and like to do it yourself, visit Wealthsimple for a convenient tax overview and checklist on what you need for this year’s filing.
Disclaimer: Oak House Benefits Inc. does not provide tax advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax advice. You should consult your own tax advisor should you have questions about your own personal tax situation.