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It’s Time To Prepare For Your 2020 Tax Return

2020 tax planning

Well, 2020 has been quite the year!!! While it isn’t over yet we recommend that you start planning for tax season now so you don’t end up with an equally shocking 2021!

During the pandemic, our government acted quickly to support individuals who were impacted in the form of the CERB.

The $2000 payment every 4 weeks for 28 weeks was much-needed life support for many Canadians who had lost their jobs. The total paid out to through CERB was $81.64 billion. 

If you received the maximum CERB amount then you will have to add $14000 of untaxed income to your 2020 return. 

You will also need to plan for the following:

The CRA is very well aware that due to the simplicity of the application system, many individuals took advantage of this benefit when they were not in fact eligible.  Our government will be looking to recoup some of this money when the 2020 tax returns become due. 

There will be additional new boxes on the 2020 T4 slips that will allow the CRA to identify individuals who were taking advantage of the system. I feel that it is highly likely that many people will need to pay back some of the CERB benefits in 2021.

If you are concerned that you may need to pay back part of your CERB we recommend planning for this now. 

Additionally, tax was not withheld from the CERB payments. Therefore depending on your total income for the year, you may end up having a balance owning when you complete your taxes. This may be a bit shocking if you are a person who traditionally receives a refund. 

For example, someone who received $14000 of CERB benefits in 2020 with no other sources of income will owe $270 at tax time. If that same person also received $5000 in EI benefits for a total income of $20000, their tax bill would be $1474.

If you owe taxes then you need to ensure you file before the April 30th deadline. 

If you were financially impacted by the pandemic and received support then we urge you to examine your tax situation now so you aren’t unpleasantly surprised.

You can use this tax calculator to estimate your taxes owing for 2020.

We recognize that tax time will be more challenging for 2020 than in previous years for many people. Subscribe to our newsletter to ensure you stay informed. 

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