Over the past several months Covid-19 has impacted our lives in immeasurable ways, and as the pandemic continues to evolve, so does the government's response to it. Many Canadians have received support from the provincial or federal government (whether receiving CERB payments, taking advantage of an extended tax filing deadline, or many other programs and incentives), and are now wondering how these things may impact their tax filing experience in 2021.
We've put together a comprehensive guide to help you navigate all the ins and outs of how recipients of the Canadian Emergency Response Benefit (CERB), and the Canadian Recovery Benefit (CRB) may see changes to their tax filing experience.
Intro to CERB/CRB benefits
Are these benefits taxable?
Unlike its predecessor CERB, Canadian Recovery Benefit (CRB) amounts are taxed at the source prior to you receiving payment. This means that you will not likely be required to pay additional taxes on these amounts, though you may still need to claim these amounts as income under certain circumstances.
To find out more, and whether or not you will need to pay back any CRB amounts you have received, visit the CRB page on the government of Canada's website.
Entering these amounts into TurboTax
Since the CERB is taxable, you can expect to receive an information slip from the CRA indicating the total amounts of CERB payments you received in 2020.
These payments should be entered as income in your tax return in the same way you would enter a T4A.
The 10% tax withheld at source may not be all the tax you need to pay. When you complete your personal income tax return, you may need to pay more (or less), depending on how much income you earned. You must report the CRB payments that you receive as income when you file your return.
The CRA will provide you with a T4A tax information slip at tax time for the amount you received in CRB benefits. You should enter these amounts in to TurboTax in the same way you would enter any other T4A income.