Watch these trends in 2021

I’ve read many projections about what will happen in 2021. I’ve even made a few myself.

My advice is to take all of them with a large grain of salt. No one can truly predict what will happen in the months ahead. Rather than be seduced by rosy forecasts (which many of them are), I suggest you watch specific trends. They’ll provide useful clues as to where the economy is going and how your investments are likely to perform. Here are some that I’m focusing on. Pace of vaccine rollout. We will never attain full economic recovery until the coronavirus is under control. And that won’t happen until a large percentage of the population is vaccinated — some public health experts put that figure at 70 per cent. So far, the rollout has been disappointingly slow in most countries (only Israel seems to have figured it out).

At the current rate it will be next fall or even 2022 before we achieve anything like the mass immunity we need. Unless there is a dramatic improvement in the distribution process, the economy is likely to languish for months to come as lockdowns continue.

Unemployment. Canada’s unemployment rate stood at 8.6 per cent in December and the underlying news was not good. Employment fell by 63,000 in the month — the first decline since April, according to Statistics Canada. A total of 1.1 million workers were affected by COVID-19 economic shutdowns.

Unemployment is a key measure of the underlying health of the economy and it’s a number central bankers and politicians watch closely. It’s discouraging that, after seeing a steady decline all summer, the December number rose. The next two months will tell us if that

pandemic puppy decides to make her new chew toy.

Here are a few tips to help you identify if you’re missing something

Technically most of your slips (including your T4, T4A, and T5 slips) and receipts have until the end of February to be issued. T3 and T5013 slips do not have to be sent before the end of March. So this may be a waiting game.

The easiest way to see if you’ve forgotten something or haven’t yet received it is to cross reference your previous two years’ worth of returns. The other great way to see if you’re missing forms is logging into CRA My Account. Tax slips that have been filed under your Social Insurance Number are also located in here. This portal is also where you’ll receive your digital Notice of Assessment (NOA) as soon as your taxes are completed and reviewed by CRA. The NOA tells you how much you’re getting back or will owe. I recommend downloading your NOA and adding it to your digital or physical filing system when it’s ready.

Finally, if you had multiple employers, expect multiple T4s. Even companies that didn’t survive the pandemic and went bankrupt are still obligated to provide these to you.

Life changes impact your taxes, too

H&R Block summarized it best this season — “major changes in lifestyle also equal changes in taxes.” Here are just a few to consider when getting organized to file.

Did you become a new parent? You might qualify for the Canada child benefit, the one-time top-up during the pandemic, the eligible dependent amount, the Canada caregiver amount, or the child-care expense deductions — and every parent can contribute to Registered Education Savings Plans and receive up to the maximum Canada Education Savings Grant.

Did you tie the knot? I did! Tax credits are calculated based on your total household income instead of individual income. So if you haven’t talked about money with your honey yet, this will force the conversation to happen, because you have to work together! If you supported your spouse throughout the year, you might also qualify for spousal transfers or the spousal amount.

Did you buy a home? You could qualify for the first-time homebuyer’s amount, the homebuyer’s plan and the GST/HST new housing rebate.

There are many more life changes that can impact your taxes, such as starting a business, becoming ill, or losing a spouse or parent. When in doubt, consult with a tax professional about what this means to your taxes.

What if you owe money?

At the front end of the pandemic financial aid, there was a pile of confusion among Canadians and within CRA that led to thousands of Canadians taking benefits that perhaps they didn’t qualify for. If you are one of these people, the CRA is flexible about repayments’ size and timing — but you do have to pay it back.

Experts still believe the bulk of Canadians should get a refund, but if you end up owing money, the first step is to figure out how much you owe, then craft up a plan to get it paid. This may mean negotiating terms with the CRA, using up savings to pay the some or all of the balance, and in certain cases, dipping into a line of credit if you have no other options. Still, before you do that, see if you can raise the money instead by taking on extra shifts at work (if available) or selling items you don’t need like bicycles or the second car you’re not using.

Paying taxes has to be done. But, it doesn’t need to be painful. Start now to get organized, file on time and get clear about if you owe, so that you can get a game plan together to pay it off.