We Asked A Quebec Tax Specialist Your Burning Questions So It's Not So Confusing In 2021
It's February! Meaning that if you're a Quebec resident in Canada, tax season 2021 is right around the corner. Why not get a head start during the province's lockdown and curfew period? It's not like you have anything better to do.
MTL Blog spoke with H&R Block Senior Tax Specialist Josée Cabral to get the 411 on doing your taxes as a Quebecer. Remember that you're always doing taxes for the previous year so the taxes you do in 2021 will cover your 2020 — as much as we wish we could pretend 2020 never happened.
When is the tax deadline and has it been extended?
The deadline to file and pay your taxes in 2021 is April 30. No extension!
If you're self-employed, you have a bit more time to file your tax return — until June 15. But either way, all taxes owed must be paid by April 30, 2021.
Cabral suggests getting a head start by gathering your expense receipts and all the necessary forms as early as February.
"Get ahead of yourself. Be organized. Don't forget to claim the things that people usually forget to claim, [such as] medical receipts because there's a possibility of getting a tax credit on that," Cabral says.
The deadline to contribute to your RRSP (Registered retirement savings plan) is March 1, 2021.
Filing your taxes early allows you to estimate how much you can invest in your retirement based on how much you're getting as a tax refund or how much you have to pay the government.
Do taxes in Quebec work differently than in other Canadian provinces?
Yes. According to Cabral, filing taxes in Quebec is slightly more complicated because Quebec residents file separate provincial and federal tax returns to Revenu Québec and the Canada Revenue Agency, respectively.
Other provinces only file to one government.
How do newcomers to Quebec and Canada do their taxes? Where do they begin?
First and foremost, they need to get a social insurance number from Service Canada which they will use to file their taxes.
If new immigrants have income from their home countries, they'll have to declare it on their Canadian income tax.
Canada has several tax treaties with different countries around the world, so while new immigrants will not be taxed twice if their country of origin has a treaty with Canada, they still have to declare their income when filing their first tax return in Canada.
If the newcomers are also first-time homebuyers in Quebec, they are eligible for a $5,000 tax credit, which comes to about $620 on the federal side and $750 on the provincial side, according to Cabral.
Which tax benefits are available for working from home during COVID-19?
Cabral says there is a special tax deduction for workers who were forced to work from home due to COVID-19 in 2020.
If your office closed down, your occupation was deemed "non-essential" or you were sent to work from home for any reason, you are eligible for tax credits at both the federal and provincial levels.
There are two possible methods.
A flat rate: $2 per day for up to 200 days, for a total of $400 maximum (no additional deductions available);
The detail method: A T2200S form and TP-64.3.V form are filled out by your employer stating you were sent home to work — and that none of your at-home work expenses were paid by your employer.
The time period you were required to work from home should also be specified by your employer on the forms.
What expenses can I claim due to working from home?
For the "Detail Method," Cabral says you can claim almost anything that was necessary to complete your work at home — from office supplies, such as envelopes, folders and pens, to a portion of your rent.
But you can only claim these things if your employer didn't already pay you back for them.
All expenses claimed are time-based, so it's important to remember that you can only claim a portion of your rent, hydro bill, cell phone bill and Internet bill for the amount of time you spent working from home.
Cabral suggests being reasonable and conservative in your calculations for work expenses.
As an example, if you rent a four-room apartment and you use one room as an office, you can only claim 25% of your rent as an expense because one-fourth of your home is dedicated to work. And you can only claim it for the time you spend working from home.
How do I provide proof of my work-from-home related expenses?
Credit card statements are not valid when providing proof of expenses to the government — so make sure to keep those receipts! Photocopies of receipts are acceptable.
Cabral says it's important to keep all your receipts for work expenses, especially for one-time purchases like printer ink, pencils or other office supplies.*
Keeping your receipts allows you to easily calculate the work expenses you've accumulated while working from home, and keep track of the dates of your purchases.
The government can verify your taxes for up to six years after filing, Cabral says, so you'll want to keep receipts for six years or longer.
How do I incorporate the Canada Emergency Response Benefit?
The Canada Emergency Response Benefit has saved the butts of many Canadians who struggled financially throughout the pandemic. To date, over eight million Canadians have applied.
If you received the CERB, it counts as taxable income — so, yes, you do need to pay taxes on your CERB money.
Cabral recommends putting aside approximately 20% of what you received through CERB for tax payments.
The Government of Canada has begun sending out T4A tax forms for CERB income you may have accumulated this year.
How do I declare income from gig economy jobs, such as Uber and DoorDash?
If you've worked multiple gigs this year, you're not alone — according to H&R Block data, one-quarter of Canada’s gig economy workforce joined in 2020.*
No matter the company you work for, you should receive a tax slip from your employer.
Gig workers are considered "self-employed," which means you are able to declare work expenses, such as gas, new tires, parking fees and cell phone bills.
It's important to note that once you've made over $30,000 of income from gig work, you must register to pay GST and QST, which are federal and provincial goods and services taxes.
The $30,000 rule applies to most freelance gigs, but not to Uber drivers, whose contracts require them to be registered for GST and QST from day one, Cabral explains.
How do I declare income from OnlyFans?
If you've made a fortune selling images of your photogenic feet online, you still have to declare it as income, says Cabral.
However, keep in mind that OnlyFans is a company based in the U.S., so your funds are considered foreign income.
According to Cabral, if you work with OnlyFans, the U.S. withholds 30% of your income for tax purposes.
When filing your personal income tax in Canada, put OnlyFans in the "foreign income" section. You should also state the amount of your income that was withheld for taxes — the company should supply this information through a tax form.
Don't forget this step so you can avoid being taxed twice for the income that was withheld.
Cabral says additional taxes may be applicable for large sums.
*This article has been updated.
