2020 was a year of uncertainty. Particularly looking at the financial side of things, shutdowns and illness has had a major impact on the livelihood of a lot of Canadians. Many lost their jobs, lost their business, and have felt the financial sting of the government all but shutting down the economy. With tax season just around the corner, many Canadians are concerned about what they may owe after being unemployed or using income support in 2020. However, before we panic, this is what you can expect going into the 2021 tax season in terms of your finances, debt and income tax.
Firstly, take a deep breath.
As anxious as many of us are about what we owe from using income benefits, these are a few things to keep in mind:
- You are not alone. As of October 2020, 1.4 million Canadians received regular EI benefits. That means many of us are in the same boat.
- You may not owe as much as you think you do (keep reading below for more details).
- To keep your anxiety at bay, be prepared. Gather your documents and file your taxes earlier this year. The deadline to pay and send in your tax return is April 30th, 2021. For self-employed people, the deadline to file your return is June 15, 2021.
There is no need to fret. Sometimes it’s good to take a step back and give yourself a moment to breathe. The more we panic, the worse things will seem, and the more stressful the situation becomes.
If you received income benefits anytime during 2020…
You will be responsible for reporting the amount you received on your 2020 tax return. This includes any income you received from the following:
- CERB (Canada Emergency Response Benefit)
- CRB (Canada Recovery Benefit)
- CESB (Canada Emergency Student Benefit)
- CRCB (Canada Recovery Caregiving Benefit)
- CRSB (Canada Recovery Sickness Benefit)
All of these are considered taxable income and, therefore, should be reported on your tax return. You will receive a T4A or T4E tax slip in the mail with the information you will need to provide when submitting your tax return. For information on filling out this information in your tax return, visit the Government of Canada website for more details or call an experienced accountant for help.
How do I know how much I owe?
On February 9th, 2021, it was announced that anyone who applied for CERB, based on their gross income, won’t have to repay as long as they meet certain criteria. What you owe back on these benefits will depend on your total income for 2020 as well as which type of income benefit you received. For more information, see this article from the Financial Post. If you are self-employed, you may have received CERB benefits. Later, you were told that you weren’t eligible due to a messaging mix-up. If this is your current situation, you will not likely be forced to repay. Overall, it’s important to remember that many are facing the same situation, so it is not a fight you have to face on your own.
If you are currently struggling with debt and are concerned about having enough money set aside to pay your taxes, then find a professional who can help. At GetMeDebtFree, we refer only to companies who we trust. If the company does not pass our Gold Standard Test, then we will not recommend their services. If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a professional who is an expert in their field of helping people get out of debt. Let it be clear, we do not mine your data nor sell your information to all kinds of companies; we are simply looking to connect people who are serious about dealing with their debt to a professional who is better suited to help make that happen. You have nothing to lose and much to gain, so fill out a contact form and take that first step to a debt-free future.
