Covid-19 expected to complicate 2020 tax returns
Feb 11, 2021 By: Cochrane Eagle Staff
“There’s been so many changes with 2020 with all the COVID programs,” Dukart said. “There’s going to be a very large focus on all these government programs.”
COCHRANE— Tax season is gearing up and this year is looking to be more complicated for many Canadians due to COVID-19.
Chartered Professional Accountant Naomi Dukart said 2020 will be a unique tax year due to the changes that have taken place during the COVID-19 pandemic.
“There’s been so many changes with 2020 with all the COVID programs,” Dukart said. “There’s going to be a very large focus on all these government programs.”
As an example, Dukart said, she is concerned many people may not be aware Canadian Emergency Response Benefits, also known as CERB, are taxable and features a clawback. The clawback will include all income earned from any source that would pay income tax.
Canadians with an income larger than $38,000, will repay $0.50 of the benefit for each dollar above $38,000 to the maximum amount of benefits received.
Dukart noted government loans received during the pandemic will also be required to be claimed as part of a taxable income.
Naomi Dukart, CPA, CGA is a professional accountant and tax practitioner.
Contact Naomi today for a complimentary consultation to answer any questions or concerns regarding changes due to Covid-19 and your personal tax return.
“This year is going to be interesting because I don’t think people really realize that all these programs are taxable the way that they are going to be,” Dukart said. “I think tax season is definitely going to be difficult for anyone who was hard hit last year, which is a huge majority of people.”
As a Chartered Professional Accountant Dukart works with a diverse selection of clients, each with their own unique claim.
“No two days are the same. Every client is different. Every business is different,” Dukart said. “My job is more about customer service than crunching numbers.”
February marks the start of the busiest time of the year, she said, and files and phone calls are coming in by the minute as people begin preparing for tax season.
January to June is the most active time of the year, she said, largely because T4s and T5s are due in February, taxes are in April and the majority of companies have a December year-end.
The documents needed can feel overwhelming for clients, she said, adding Chartered Professional Accountants charge clients based on the complexity and time their files take. For anyone with rentals or small business they are running as full profiteers it is helpful to prepare summaries along with organized documents.
While key documents begin to come in February, Dukart said, she recommends clients maintain a folder throughout the year for important receipts and expenses.
“Keep everything in the folder and then at the end of the year when January and February comes and start getting your T4s organized,” Dukart said. “Receipts go missing … It’s just best to print it and put it in a folder. Then it’s just there for you.”
Being organized throughout the year goes a long way to being ready to file your taxes, she said, explaining it can help people avoid falling behind, filing late and incurring penalties.
When clients visit her first step is providing a personal tax checklist.
The list asks clients to review their last tax year to understand what to expect and if any changes may take place. The checklist also provides a list of critical documents including T4s and T3s.
“The T1 checklist, for me, is really a primary source for our starting point,” Dukart said. “It helps get clients ready for what they need to bring us.”
Dukart said she also provides a tax deduction checklist which includes RSPs, child care, moving expenses, medical expenses, tuition, buying a house and more.
She noted, that even if someone has a zero return for their taxes it is important to file to ensure they are up to date with the government.
“If you’re off work for a couple of years still file there’s still benefits to it,” Dukart said. “You always have to file.”
Dukart said she recommends people sign up for the Canadian Revenue Agency My Account system to make tax filing a breeze. The system allows users to check on GST or Child Canada Benefit payments, if they owe money and more. She added the system also allows users to set up a direct deposit of tax returns to their bank.
Any changes in marital status, dependants and address changes can also be updated on the My Account.
“Having all that set up is really convenient,” Dukart said. “People that use it really enjoy having that access.”