We’re thinking about taxes early this year. One big question that a lot of people are thinking about is how “working from home” affects things. Finance Expert Bruce Sellery is breaking it down – so you don’t miss out.
Let’s start with things you CANNOT deduct when you’re working from home. I found some crazy attempts online.
- Your backyard renovation: The guy argued that his home office was overlooking the pool, so it became part of his home office.
- Pet expenses: So many people have bought puppies in the last 8 months. This owner said that the dog was a key part of her security system. Not in Canada and certainly not when it’s a teacup Pomeranian.
How does this new $400 deduction work?
You’ll still be able to deduct home office expenses the old way – where you figure what portion of your house is your home office and keep receipts for everything.
But this new way is more of an honour system with a limit. The federal government has said that you can deduct up to $400 of home office expenses without receipts. And without requiring a form from your employer (which is how it normally works).
We don’t have the full details on how it is going to work, but it will likely be connected to how long you’ve worked at home. For example, if it was only a month, you might not get the full $400 amount. But if it has been since March, you would. Bottom line, don’t push it.
CERB has made things even more complicated, how does it affect our taxes?
The CERB is taxable and no tax was deducted at the source like it would be if it was income for a regular job-job. So you might have to pay the tax this April, depending on how much you earned in the year.
Let’s say you received $12K on the CERB, and you have to pay 15% in tax – that is $1800. If you will owe money, you may need to figure out where that money is going to come from.
What about the new programs? How are they taxed?
There were 3 other programs that launched in Fall and all 3 are taxable. But 10% of the amount is withheld at the source.
- The Canada Recovery Benefit (CRB) is for people who don’t qualify for traditional employment insurance.
- The Canada Recovery Sickness Benefit (CRSB) provides income support to people who are sick or need to self-isolate because of COVID or have an underlying condition that puts them at a greater risk.
- Canada Recovery Caregiving Benefit (CRCB) is for people who need to care for a child under 12 years old, or a family member who needs supervised care.
What are other things that people should get on top of when it comes to taxes?
Get it done, early, so it’s off your mind and you can put 2020 behind you. Tax slips will take some time to arrive but you can start gathering receipts for childcare and donations. Maybe this is the year you start doing it yourself or maybe you stop doing it yourself.
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