Being a student can be difficult financially at the best of times, but navigating this financial landscape during a pandemic brings this struggle to a whole new level. With tax season approaching, the Canada Revenue Agency (CRA) recommends that you file your income tax return (even if you didn’t have an income) to make sure that you receive any of the benefits, credits, or even a refund that you may be qualified to receive.
Some of the easiest ways to avoid delays to your tax and benefit affairs are to sign up for direct deposit, file your tax return online, and make sure that your personal information is up to date. The CRA recommends signing up for My Account (canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html) as a quick and easy way to manage and keep track of your tax and benefit information. The Get Ready page on the CRA website (canada.ca/en/revenue-agency/campaigns/taxes-get-ready.html) is an excellent resource with information about tax deadlines, ways to do your taxes, checking whether you are eligible for credits and benefits, and other useful topics. There are also some helpful videos on this webpage.
If you received COVID-19 benefits, it might affect your tax return. The Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and Canada Recovery Caregiving Benefit (CRCB) are all considered taxable income. The total amounts that you received from these benefits will have to be included on your tax return. You will be sent a T4A tax slip for benefits issued by the CRA and/or a T4E tax slip for benefits issued by Service Canada with the information needed for your tax return. You can view these tax slips in My Account starting in February.
Depending on your circumstances and which COVID-19 benefits you may have received, you might owe taxes when you file your return. Income taxes were not withheld on CERB or CESB payments, which will affect your tax return. 10% of the CRB, CRSB, and CRCB payments were withheld as taxes but may not cover all of the taxes owed on this income. The total amount of income tax that you owe will depend on your total income for 2020.
The CRA recognizes that the repayment of these benefits could cause considerable financial hardship for some individuals and have expanded the payment arrangement parameters to allow for more time and flexibility. The CRA’s TeleArrangement service can be reached at 1- 866-256-1147 (7 AM - 10 PM, Monday to Friday) to make payment arrangements. Please file your tax return by April 30, 2021, to avoid a late-filing penalty.
There could be other impacts on your income tax return, specific to the COVID-19 benefit(s) you received.
There may be organizations or volunteers near you that will complete your tax return for free if you have a simple tax situation and a modest income. Due to COVID-19, this may be conducted by videoconference or by telephone, or by dropping off your documents. Visit canada.ca/en/revenue-agency/campaigns/free-tax-help.htmlfor more information about free tax clinics.
If you would like to file your tax return online, visit canada.ca/en/revenue-agency/services/e-services/e-services-individuals/netfile-overview/certified-software-netfile-program.html for a list of NETFILE certified tax software. Some of these programs are free.
Here are some benefits and tax credits that might be helpful to students at tax time; check them out to see if you are eligible:
· Tuition Tax Credit: In most cases, if you took a post-secondary course at a Canadian educational institution in 2020, it will qualify for a tuition tax credit. Individuals who were 16 or older by the end of 2020 can also be eligible if they were developing or improving skills in an occupation at an educational institution certified by the Minister of Employment and Social Development Canada.
· Carrying Forward Past Amounts: The federal education and textbook tax credits were phased out in 2017, but you can carry forward unused credits from previous years to use with this year’s taxes.
· Canada Training Credit: This refundable credit is for eligible tuition and other fees that were paid to an eligible Canadian educational institution for courses taken in 2020 or for examination fees paid for occupational, trade, or professional exams taken in 2020.
· Interest Paid on Student Loans: You might be eligible to claim part of the interest that you have paid on your student loan for post-secondary education, going back to 2015.
· Eligible Moving Expenses: If you are a full-time student and you moved to attend school, you may be able to claim for your moving expenses. You might also be eligible to claim for moving expenses if you moved for work, such as a summer job or to run a business. You have to have moved 40 km or more to be closer to your school or work to be eligible to claim moving expenses.
· Canada Workers Benefit: This refundable tax credit is available to eligible individuals and families who work but earn a low or moderate income. Full-time students must have an eligible dependant to qualify for this benefit.
· GST/HST Tax Credit: This tax-free quarterly payment helps individuals with low or modest incomes.
· Canada Child Benefit: Eligible parents with children under the age of 18 may qualify to get tax-free monthly payments under this benefit.
· Provincial and Territorial Benefits: Depending on where you live, you might be eligible for provincial or territorial benefits.
· Climate Action Incentive: Residents of Alberta, Saskatchewan, Manitoba, or Ontario may be eligible for the climate action incentive payment when filing their 2020 tax return. Residents of small or rural communities could receive a larger amount. This incentive first lowers the taxes owed and then creates or increases a refund.
· Child Care Expenses: If you had to pay for child care so that you could go to school, work, or do research, you might be able to deduct these child care expenses.
Protecting yourself from scams is important in this day and age, as is knowing when and how the CRA might contact you. You can sign up for email notifications from the CRA to help to prevent fraud. This service will notify you when you have new mail in My Account and when personal information such as your address or direct deposit information has been changed on the CRA’s records. Go to canada.ca/en/revenue-agency/campaigns/fraud-scams.html for more information on how to protect against fraud and scams.
Visit canada.ca/en/revenue-agency/services/tax/individuals/segments/students.html to learn more about filing your income tax return.
Dean LaBerge, Local Journalism Initiative Reporter, Grizzly Gazette