Any one having problems with the T4E for Maternity and Parental Leave benefits? Turbotax is considering the Parental EI Benefit taxable when if fact it is not.

[Moussi2]

As per CRA, EI payments are taxable income. Benefits and Income Tax Like Employment Insurance (EI), Provincial Parental Insurance Plan benefits are considered taxable income and will be withheld at the source.

I hope this help resolve your issue. Thank you for choosing TurboTax

[michaelhort1]

Good day,

As per the reference provided by "Moussi2", special benefits, such as Maternity and Parental, are not subject to taxation (See "Exemption" section of Ref - https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/repayment.html).

Is any one else having difficulty with Turbotax, in that the software is identifying "special benefits", such as Maternity and Parental, as having to be repayed. It would appear that it is a glitch in the Turbotax software. Can anyone recommend a better tax program than Turbotax that does not exhibit this error.

Best regards.

[michaelhort1]

To provide additional context for my question, my situation is the same as that in "Example 4" provided by the CRA link (Ref - https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/repayment.html).

Example 4 (Copied from CRA):

Tax years 2014 to 2023 Tax year 2024
EI claim
45 weeks of regular benefits paid in 2019 EI claim
20 weeks maternity, parental, sickness, or compassionate care benefits paid

You received EI maternity, parental, sickness, compassionate care or family caregiver benefits in tax year 2024. Regular benefits were paid in 2019. Although your net income exceeds $79,000 in 2024, you are exempt from benefit repayment for tax year 2024 as maternity, parental, sickness, compassionate care and family caregiver benefits are exempt from the benefit repayment provisions.

Question:

Why is Turbotax calculating that I have to repay the Parental benefits, when the CRA's example indicates that this must not be repaid. I am misunderstanding something? Is the Turbotax software calculating the return incorrectly?

Thank you.

[michaelhort1 · Accepted solution]

Question resolved.

Confusion arises between the CRA's wording of "taxable/non-taxable" and "repayment". When reading the CRA's explanation, they state that EI benefits are subject to taxation, however parental and other "special" benefits are exempt from repayment. I first understood this to mean that "special" benefits are not taxable, however this is not the case.

It turns out that "repayment" and "taxation" are separate concepts. For regular EI benefits, you must both repay a portion of the benefit (with some caveats) and pay income tax on the benefit.

For special EI benefits, such as parental, you must pay income tax on the benefit received, but do not need to"repay" any portion of what you received.