When situations to our economic and work behaviour occur, we are often confused or unsure of what that means when it comes to our taxes. Are things going to change or stay the same? And if they do change, how will it affect me? As of right now, there have been no specific tax regulations or changes related to being in quarantine during the pandemic.
Whether you are employed or self-employed, it is understandable to have tons of questions due to the global pandemic.
Here are some of the most commonly asked questions:
What happens if I work less or stop working?
Once you experience a decrease in your income, your taxable income will also go down. This taxable income is what determines your tax bracket, or what rate of tax is used to calculate how much taxes you will owe at year’s end. Less employment income will result in less taxable income, and this should be indicated on your T4 slip. If you had applied for CERB or CRB, then these benefits will be added to your income which leads to increases in your tax liability. Your CERB and CRB income will be reported on a T4A slip. The CRA will hold onto 10% of your CRB earnings but no percentages from your CERB. But this amount will not cover the first federal and provincial tax bracket. We recommend that you save some money on the side in case you will be required to pay taxes once you file your income tax return.
Will I be allowed to write off (or claim) supplies that I use when working from home?
If your work environment has changed, and your employer has required you to work from home, your employer will have most likely given you what you need to do your job during quarantine. There is a possibility you might have had to purchase some items while you are away from your office. If you had not been compensated for these items by your employer, you might be eligible to claim some of your employment expenses. Your employer will need to give you a T2200 Declaration of Conditions of Employment form. You will then need to complete the T777 Statement of Employment Expenses form, which outlines your costs. Be sure to compile and safely keep all your receipts.
What happens if I get Employment Insurance (EI) benefits?
EI is another type of income that is taxable income. You will receive a T4E Statement of Employment Insurance and Other Benefits, which will indicate your EI earnings. Just like the CRB, the CRA will withhold 10% of your EI earnings but it is recommended to save some money in case you are required to pay taxes once you file your income tax return.
For more information about COVID-19 and other tax related updates, contact Oasis LLP today and speak to one of our advisors.
The information contained within this blog is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Please Book an Appointment to discuss how information contained here pertains to you.
About Oasis LLP – Advisors and CPAs
At Oasis LLP we help business owners find what is at the end of the rainbow. With over 25 years of expertise in business advisory, accounting & auditing, and personal and corporate tax, we can help you navigate the accounting and tax world. We are located in Richmond Hill serving Markham, Richmond Hill, Vaughan, and Toronto.
