Tax season is approaching. As with so many other parts of our lives, the COVID-19 pandemic may have an effect on the usual way that seniors manage their taxes. The Canada Revenue Agency (CRA) has released some tips to help avoid interruptions to any benefits and help make sure that you receive all of the benefits and credits to which you may be entitled.
Some of the easiest ways to avoid delays to your tax and benefit affairs are to sign up for direct deposit, file your tax return online, and make sure that your address and personal information is up to date. The CRA recommends signing up for My Account (www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html) as a quick and easy way to manage and keep track of your tax and benefit information. The Get Ready page on the CRA website (www.canada.ca/en/revenue-agency/campaigns/taxes-get-ready.html) is an excellent resource with information about tax deadlines, ways to do your taxes, checking if you are eligible for credits and benefits, and other useful topics. There are also some helpful videos on this web page.
An income tax and benefit package will be sent to you automatically if you filed a paper return last year, so you do not need to risk exposure to COVID-19 by going out to get one. The income tax and benefit package is also available online at www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package.html. File your tax return as soon as possible to avoid interruptions or delays to your benefit and credit payments.
If you received COVID-19 benefits, it might affect your tax return. The Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and Canada Recovery Caregiving Benefit (CRCB) are all considered taxable income. The total amounts that you received from these benefits will have to be included on your tax return. You will be sent a T4A tax slip for benefits issued by the CRA and/or a T4E tax slip for benefits issued by Service Canada with the information needed for your tax return. You can view these tax slips in My Account starting in February.
Depending on your personal circumstances and which COVID-19 benefits that you may have received, you might owe taxes when you file your return. Income taxes were not withheld on CERB or CESB payments, which will affect your tax return. 10% of the CRB, CRSB, and CRCB payments were withheld as taxes, but may not cover all of the taxes owed on this income. The total amount of income tax that you owe will depend on your total income for 2020.
The CRA recognizes that the repayment of these benefits could cause considerable financial hardship for some individuals and have expanded the payment arrangement parameters to allow for more time and flexibility. The CRA’s TeleArrangement service can be reached at 1- 866-256-1147 (7 AM - 10 PM, Monday to Friday) to make payment arrangements. Please file your tax return by April 30, 2021, to avoid a late-filing penalty.
There could be other impacts on your income taxes specific to the COVID-19 benefit(s) that you received.
There may be organizations or volunteers near you that will complete your tax return for free if you have a simple tax situation and a modest income. Due to COVID-19, this may be conducted by video conference or by telephone, or by dropping off your documents. You can find more information about free tax clinics at www.canada.ca/en/revenue-agency/services/tax/individuals/community-volunteer-income-tax-program.html.
If you would like to file your tax return online, a list of NETFILE certified tax software is available at www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/netfile-overview/certified-software-netfile-program.html. Some of these programs are free.
Protecting yourself from scams is important in this day and age, as is knowing when and how the CRA might contact you. You can sign up for email notifications from the CRA (www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/online-mail-helping-you-organize-your-canada-revenue-agency-mail.html) to help to prevent fraud. This service will notify you when you have new mail in My Account and when personal information such as your address or direct deposit information has been changed on the CRA’s records. More information on how to protect against fraud and scams is available at www.canada.ca/en/revenue-agency/campaigns/fraud-scams.html.
You may be eligible as a senior for benefits and credits like the GST/HST tax credit (www.canada.ca/en/revenue-agency/services/child-family-benefits/goods-services-tax-harmonized-sales-tax-gst-hst-credit.html) and other related provincial and territorial benefits and credits (www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/provincial-territorial-tax-credits-individuals.html).
If you owe money on your tax return, you might be eligible to claim tax credits that can reduce the amount that you owe. Check into the Canada Caregiver Credit, the Disability Tax Credit, the Medical Expense Tax Credit, the Home Accessibility Tax Credit, the Age Credit, and the Pension Income Credit. You may also be eligible for pension income splitting.
Look into the guaranteed income supplement. It’s a monthly benefit for recipients of the old age security pension who live in Canada and have low income.
Residents of Alberta, Saskatchewan, Manitoba, or Ontario may be eligible for the climate action incentive payment when filing their 2020 tax return. Residents of small or rural communities could receive a larger amount. This incentive first lowers the taxes owed and then creates or increases a refund.
Claiming potential benefits and tax credits is important. It helps you with your expenses and puts more money in your pocket. Research which benefits and credits you might be eligible for so that you don’t miss out on these money-saving opportunities.
A list of all the available deductions, credits, and expenses can be found at www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/deductions-credits-expenses.html. Look it over and check to see if you are eligible for any of them.
More information on changes to your taxes when you retire or turn 65 is available at www.canada.ca/en/revenue-agency/services/tax/individuals/segments/changes-your-taxes-when-you-retire-turn-65-years-old.html.
Contact the CRA at www.canada.ca/en/revenue-agency/corporate/contact-information.html.