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How CERB, EI and CRB Will Affect Your Taxes In The Age Of COVID-19

How CERB and Canada’s new work from home deduction will impact you.

It’s tax time in Canada. While the turning of the calendar pages to March and April usually brings a slew of questions around deductions, T4s and taxation, the COVID-19 pandemic has thrown an additional wrench into the things.

According to Statistics Canada, COVID-19 relief benefits put an extra $2,500 cash into the pockets of middle-income households. Between March 15 and Oct. 3, the federal government paid out more than $81.6 billion in Canada Emergency Response Benefits (CERB) to 8.9 million people.

And all of that is taxed.

A person looks at a Canada Revenue Agency homepage in Montreal on Aug. 16, 2020.
A person looks at a Canada Revenue Agency homepage in Montreal on Aug. 16, 2020.

New benefits like the CERB, and new tax deductions for things like working from home mean filing your taxes for 2020 will be a bit different than previous years.

But what do all of this year’s changes mean for your taxes? Here’s what you need to know.

When to file

For most Canadians, the usual date of April 30, 2021 to self-file your taxes remains the same, and so does June 15, 2021 for self-employed Canadians.

However, if you made under $75,000 last year and received one of the government’s COVID-19 benefits, you can delay paying any tax owing with no consequences until April 2022. These benefits include the Canadian Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB) and employment insurance as well as other smaller benefits.

If you owe taxes, you still have to file on time to avoid penalties.

How to get the work from home deduction

If you worked from home at all during 2020, you may be eligible for a tax break, but you have to know to ask for it.

To qualify, you must have worked from home more than 50 per cent of the time for at least four consecutive weeks last year.

There are two ways to claim a deduction: one that’s complicated and one that’s simple. The complicated way has been around for work-from-homers for a while. It involves calculating what percentage of your household expenses — from heating to office space to furniture — went towards working from home. The CRA has a handy calculator to help you out but remember that you need the receipts.

The simple way is new this year. The new temporary flat rate method means workers can claim a tax deduction of $2 for each day they worked from home, up to a maximum of $400.

If you’re using self-filing software, expect a section where you can claim that amount.

How to get the digital news tax credit

Another relatively new entry for the 2020 tax season is the digital news tax credit. Canadians can claim up to $500 for a subscription to a qualifying journalism organization, which translates to a maximum of $75 returned to you.

Do I need to repay CERB on my taxes?

No. Canadians who received CERB do not have to pay back the full amount as part of your taxes. If you did receive financial assistance from the government that you weren’t eligible for, you may have to pay it back, but it’s a separate process from your tax return.

Do I have to report CERB or other benefits on my taxes?

Yes. Benefits like the CERB, CESB and CRB are taxable income, meaning they will show up on your taxes. When it comes to the CERB and CESB, no taxes were withheld by the government. For the CRB and other benefits, a 10 per cent tax was withheld.

If you haven’t already, expect to get a T4A slip for any benefits paid out by the Canada Revenue Agency, and a T4E for money sent from Service Canada, like Employment Insurance.

“If you made under $75,000 last year and received one of the government’s COVID-19 benefits, you can delay filing with no consequences until April 2022.”

If you had other income in 2020, you might actually owe money on your taxes because of the benefits, and the CERB may bump you into a different tax bracket. For example, if you made $25,000 last year but received $8,000 in CERB payments, your total taxable income was actually $33,000.

When it comes to the CRB, you may have to pay part of it back if your additional income for 2020 was over $38,000. You’ll be required to repay $0.50 for every dollar you made over that amount, to a maximum of the CRB amount. So if you made $40,000, expect to pay back $1,000.

You also may have to pay back some of your EI benefits if your total income ended up over $67,750.

Be sure to watch for any provincial benefits you applied for, as they may also require you to pay income taxes.

CORRECTION: A previous version of this article said CERB recipients making under $75,000 could delay filing to 2022. They can delay payment of taxes owing until that time, but should still file this year.

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