2020 was an extraordinary year.
Unlike previous years where you probably only focused on getting your T4 slip and that was it, your 2020 tax return filing may look a bit different.
Canadians who received COVID-19 financial benefits are required to report the income on their tax return.
You must report income received from the Canada Emergency Response Benefit (CERB) and Canada Emergency Student Benefit (CESB). Recipients of these benefits will get a T4A slip from CRA.
Other benefits that have been paid in the 2020 tax year include:
- Canada Recovery Benefit (CRB)
- Canada Recovery Sickness Benefit (CRSB), and
- Canada Recovery Caregiving Benefit (CRCB)
Tax was withheld at source for these three benefits, however, depending on how much you earn from other sources, you may still owe taxes or receive a refund.
The RRSP dollar limit for 2020 is $27,230.
If you have RRSP contribution carried over from 2020, you have until February 28, 2021, to make those contributions and claim them as a deduction on your 2020 tax return.
The standard basic personal amount your tax-free allowance for 2020 is $12,298.
First-time homebuyers can withdraw up to $35,000 from their RRSP tax-free and put it towards the purchase of a home under the revamped Home Buyers’ Plan. A couple can withdraw up to $70,000.
Home Office Expense Deduction: For the 2020 tax year, the CRA has issued some timely guidance to clarify its position on employees deducting home office expenses, in light of the COVID-19 pandemic.
The CRA has issued a simplified form (T777S, Statement of Employment Expenses for Working at Home Due to COVID‑19) for deducting home office expenses in 2020, which employees must complete and submit with their 2020 personal income tax return, whether using the simplified or traditional approach.
- A Simplified flat daily rate reduction method, eligible employees will be able to claim a personal income tax deduction for home office expenses at a flat rate of $2 per day worked at home in 2020 due to COVID-19, up to a maximum of $400. To be eligible for this deduction, employees must have worked more than 50% of the time from home over a period of at least four consecutive weeks in 2020, due to the COVID-19 pandemic. Provided this condition is met, all days worked at home during the year are eligible for the flat rate claim. If multiple employees worked at a single household, each eligible employee is entitled to claim the flat rate deduction using the temporary simplified method.
- Traditional Method - Employees may instead choose to deduct home office expenses using the traditional method for 2020. To do so, the employee would be required to:
- obtain a completed and signed form T2200, or new form T2200S from their employer
- determine the percentage of time that they worked from home and their eligibility for deducting home office expenses
The federal tax brackets for 2020, the federal tax brackets are:
$0 to $48,535: 15%
over $48,535 up to $97,069: 20.5%
over $97,069 to $150,473: 26%
over $150,473 to $214,368: 29%
over $214,368: 33%