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A beginner's guide to doing your taxes in Canada


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First time filing taxes in Canada? Need a refresher? We have you covered. Here’s what you need to know about how and when to file your taxes, and what’s new this year.

 

5 key steps to doing your taxes

1. Keep an eye on tax deadlines for 2020

April 30, 2021: Deadline to file your taxes.
June 15, 2021: Deadline to file your taxes if you or your spouse or common-law partner are self-employed.

2. Gather your documents

Collect your tax slips (like your T4, T4A, etc.) and receipts. Also, track down any related documents, like self-employment income, foreign investments, assets, and other earnings. You’ll need all of this in order to report your income. Full list of tax slips.

Find deductions, credits, and other expenses that you can claim on your tax return, like Home office expenses, Disability tax credit, Canada Training Credit, etc. These help reduce the amount of tax you have to pay. Full list of deductions, credits, and expenses.

3. Decide how you’re going to prepare your taxes

There are many options out there to make doing your taxes easier. You can:

  • Calculate and file taxes online with CRA-approved software.

  • Authorize someone else to do your taxes, like a family member, friend, or accountant.

  • Visit a free tax clinic where a volunteer can complete your taxes for you.

  • Go to a discounter - this is a tax preparer who calculates your refund and pays you a discounted tax refund right away, before they file your tax return.

  • File a paper tax return. If you are eligible, the CRA will invite you to file your taxes by entering your information through their automated phone line (open to people with low or fixed income and a simple tax situation).

Get more details on each of these options and make sure you’re using a CRA-approved method.

4. Make sure your personal info is up-to-date

Outdated personal information can delay your tax refund, credits, etc. Make sure that everything in the "Identification" section of your tax return is correct, including your:

  • Marital status

  • Address

  • Social insurance number (SIN)

5. Calculate whether you get a refund or owe a balance

If the total amount of taxes you owe is less than your total amount of tax credits, you’ll get a tax refund after you file. You can get this via direct deposit.

If the total amount of taxes you owe is more than your total amount of tax credits, you need to pay taxes. Make sure you pay what you owe no later than April 30, 2021, to avoid paying interest and late-filing penalties. Learn more about paying taxes you owe and options if you can’t pay right away.

 

How will COVID-19 affect your taxes this year?

Taxable income

If you received any payments in 2020 from the Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), or Canada Recovery Caregiving Benefit (CRCB), these are considered part of your taxable income. This means that you have to report it as income when you file your taxes. The agency responsible for the payment (CRA or Service Canada) mailed T4A or T4E tax slips at the end of February, showing the total amount in benefits you received. If you haven’t gotten yours, check CRA’s My Account.

Tax credits

This year, many Canadians found themselves applying for tax credits and deductions they hadn’t considered before. Here are two in particular that may apply to you.

Home-Office Expenses Deduction
Since so many more Canadians worked remotely in 2020, the government has made it simpler to claim a deduction for home office expenses this year. You qualify for the deduction if you performed more than 50% of your work from home over at least four consecutive weeks during 2020. You can deduct $2 for every day that you worked at home due to the pandemic (up to a maximum of $400) from your taxable income.

Get all the details.

Canada Training Credit
This is a new refundable tax credit you can claim if you paid for tuition or training in 2020. Starting in 2019, all eligible individuals started to accumulate $250 a year (up to a maximum on $5,000 in a lifetime). This year, you can claim the full balance in your Canada Training Credit account, or up to half your eligible training fees, whichever is less. Any amount you don’t use stays in your account and you can claim it in the future.

Get all the details.

 

Learn more about taxes

5 ways to make your tax refund work for you
Pay less tax with a spousal RRSP
5 great tax benefits of RRSPs

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