2020 was a year of uncertainty. Particularly looking at the financial side of things, COVID-19 has had a major impact on the livelihood of many Canadians. Many Ontarians lost their jobs, lost their business, and have felt the financial sting of the government all but shutting down the economy. But we didn’t leave the uncertainty behind in 2020. We are still feeling the strong impacts in Ontario. With tax season just around the corner, many Canadians are in fear of 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 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 those who are self-employed, 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 experience 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 of us 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 worried about having enough money set aside to repay your taxes, we can help you at 4 Pillars. If you’re worried about paying back any loans, debts, or benefits you owe, we can create a plan for you and give you the best chance at debt recovery. Talk with one of our debt relief specialists today at one of our 3 locations in Northern Ontario. You can reach our Muskoka & Parry Sound office at 705-640-0187, our North Bay office at 705-980-0158, or our Sudbury office at 705-806-1252. Stop letting debt control your life — take the first step today!