With tax season upon us, even the calmest and most collected of people are feeling extra pressure this year. When you consider expenses incurred working from home, COVID-19 benefit payments, or any of the other tax implications that could affect your 2020 tax return, it’s enough to make you wonder which pile of paper you should start digging through first.
Fear not. This handy checklist will help you get organized, making it easier for your accountant to identify any tax savings (and who doesn’t want that?).
So, let’s get those taxes filed and put them behind us, along with the hot mess of a year that was 2020.
You’re required to claim any money you brought in throughout 2020, from your employment income to government benefits to that Co-op cheque you might have gotten in the mail.
You’ll need the corresponding tax slips (if applicable), like a T4 from your employer, so be sure to have those on hand when you meet with your accountant.
Here’s a list to get you started:
Employment or self-employment income
As part of your employment or self-employment income, you’ll claim commissions, gratuities and anything that might not be covered on your T4 slip.
Government benefits you received, such as the universal child care benefit (UCCB), employment insurance or workers’ compensation need to be listed on your tax return.
COVID-19 benefit income
This is a new—and maybe grey—area for some. If you collected emergency or recovery benefits, you’ll get a tax slip to disclose what you received.
Investment income covers things like capital gains (or losses) and interest you’ve earned over the year. That means if your bank account earned interest, that amount needs to be claimed (yes, even if it’s a miniscule amount). An investment such as a compound guaranteed investment certificate (GIC) would be an exception, as the interest is paid when the investment is cashed and not annually.
Pension and savings plan income
If you’re drawing from a pension or a savings plan, like a registered disability savings plan (RDSP), your tax return will have to include those amounts.
Not sure if it counts as income? You can find more details on the Government of Canada’s website.
Deductions, credits and expenses
Deductions, credits and expenses can be used to lower the amount of tax you have to pay.
Here are some of the tax-saving items you may be able to claim:
Family, child care and caregiver expenses
Daycare, child support, and even medical expenses fall into this category. If you have kids or you’re caring for a family member, check with your accountant as to deductions you might be eligible for.
Whether you’re taking post-secondary courses or paying them off, education deductions and credits can ease the financial burden.
Disability deductions and credits
Tax credits may be available to those who have a mental or physical disability, or care for someone who does.
With more people working from home since last year, a big question is whether work-from-home expenses can be claimed. Some certainly can. You might also be able to claim moving expenses and professional dues related to your job.
Pension and savings plan deductions and credits
Claiming any contributions you make to pension and savings plans throughout the year can give you a break come tax time.
Climate action incentive
Residents of Alberta, Saskatchewan, Manitoba and Ontario pay a fuel charge when they fill up at the gas pump and on their home heating bills. The climate action incentive, which is new for the 2020 tax year, can help eligible residents recoup some of what they’ve spent.
If you’re worried about missing out on a tax deduction or credit, you can also search online to see what you might be eligible for.
Don’t forget to check out the tax rules in your home province or territory. Although you’re filing a federal tax return, there are some taxes to be paid—and credits to be had—based on where you live.
Or better yet, reach out to an accountant who knows this tax stuff inside and out. With a tax professional on your side, you’ll have one less thing to stress about after a year that was more than stressful enough.