Tax season brings opportunities and challenges

There are two ways to claim expenses for working from home

SAINT JOHN, N.B. — Accountants have warnings and opportunity to flag for Canadians as they prepare to do their taxes for a year when the COVID-19 pandemic vastly changed the employment landscape.

Working from home provides one deduction opportunities.

“The biggest thing that is new this year is the home-office deduction,” said accountant Mike Bourque, owner of Riverview Tax and Accounting.

There are two ways to take advantage of this deduction, Bourque said: first, there is a simplified $2 a day option up to a maximum of $400, he said.

The other detailed option allows those who worked from home more than 50 per cent of the time due to COVID to deduct a portion of rent, electricity, internet and office supplies, said Josée Cabral, senior tax specialist at H&R Block.

On Canada Revenue’s website, there is a new portal that allows you to enter these types of expenses to calculate which of the two options will be best for you, she said.

Those who received CERB need to be prepared to pay tax on the benefit.

Cabral said she has been recommending to her clients they set aside 20 per cent on each CERB payment, but how much someone is taxed will depend on what their income is, she said. This might vary based on how much someone earned in the months before the pandemic or if they received the maximum total CERB payment, which will depend on when they applied and if they received it for the duration of the program, she said.

The tax filing deadline is April 30, but that doesn’t mean you should wait until April, said Bourque.

Cabral said many people are unaware that RRSP contributions can be made until March 1 to offset taxes for the previous year. If you see your accountant in February, they can help calculate if it makes sense to buy RRSPs for tax relief reasons, she said.