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 seniors manage their taxes. Canada Revenue Agency (CRA) has released some tips to help avoid interruptions to any benefits and help make sure that people receive all of the benefits and credits to which they may be entitled.
Some of the easiest ways to avoid delays to tax and benefit affairs are to sign up for direct deposit, file a tax return online, and make sure that addresses and personal information are up to date. CRA recommends signing up for My Account (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 tax and benefit information. The Get Ready page on the CRA website (canada.ca/en/revenue-agency/campaigns/taxes-get-ready.html) is an excellent resource with information about tax deadlines, ways to do taxes, checking for eligibility 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 automatically to anyone who filed a paper return last year, so they 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 canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package.html. Filing a tax return as soon as possible avoids interruptions or delays to benefit and credit payments.
COVID-19 benefits might affect tax returns. 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. Total amounts received from these benefits will have to be included on tax returns. Recipients 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 their tax return. These tax slips can be viewed in My Account starting in February.
Depending on personal circumstances and which COVID-19 benefits were received, people might owe taxes when they file their return. Income taxes were not withheld on CERB or CESB payments, which will affect tax returns. 10 per cent 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 owed will depend on total income for 2020.
CRA recognizes 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. CRA’s TeleArrangement service can be reached at 1.866.256.1147 (7 am to 10 pm, Monday to Friday) to make payment arrangements. File tax returns by April 30, 2021, to avoid a late-filing penalty.
There could be other impacts on income taxes specific to the COVID-19 benefit(s) received.
There may be organizations or volunteers that will complete a tax return for free if someone has 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 documents. More information about free tax clinics is available at canada.ca/en/revenue-agency/services/tax/individuals/community-volunteer-income-tax-program.html.
To file a tax return online, a list of NETFILE certified tax software is available at canada.ca/en/revenue-agency/services/e-services/e-services-individuals/netfile-overview/certified-software-netfile-program.htm. Some of these programs are free.
Protection from scams is important in this day and age, as is knowing when and how the CRA might make contact. Sign up for email notifications from the CRA (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 provide notification when users have new mail in My Account and when personal information such as their address or direct deposit information has been changed on CRA records. More information on how to protect against fraud and scams is available at canada.ca/en/revenue-agency/campaigns/fraud-scams.html.
People may be eligible as a senior for benefits and credits like the GST/HST tax credit (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 (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 owing money on a tax return, people might be eligible to claim tax credits that can reduce the amount they 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. People 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.
Claiming potential benefits and tax credits is important. A list of all the available deductions, credits and expenses can be found at 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 for eligibility for any of them.
More information on changes to taxes when retiring or turning 65 is available at canada.ca/en/revenue-agency/services/tax/individuals/segments/changes-your-taxes-when-you-retire-turn-65-years-old.html.
Contact the CRA at canada.ca/en/revenue-agency/corporate/contact-information.html.
