11 Tips For Maximizing Your 2020 Income Tax Returns

Canada’s Minister of Seniors says that she wants older Canadians to get the biggest bang from their income tax returns.

“One of my key responsibilities as minister is to help support seniors financial security,” said Deb Schulte during a recent Facebook Live event where she provided information and useful tips on how Canadians over the age of 65 can get the most bang from their income tax returns.

 

“One way that seniors can maximize their financial support is through the tax system.” said Schulte, who was joined by several experts from the Canada Revenue Agency (CRA) to share their insight on optimizing your tax return as well as avoiding the many scams and frauds that inevitably crop up at this time of year.

Ironically, the CRA isn’t immune to scams itself. Recently, hackers breached the agency’s online system in an effort to capture taxpayers’ usernames passwords and personal information. While the agency claims the damage was limited, it culminated in 800,000 users being locked out of their accounts.

Schulte used her online tax information session to urge seniors to file their taxes on time. “Even if you don’t have any income to report, it’s important that you fill out a tax form,” she said.

That’s because many important seniors benefits are unlocked when the government receives your completed tax form. The CRA calculates these credits and benefits based on your reported income when you file. These include: GST/HST Credit, Age Amount Credit, Climate Action Incentive, Old Age Security (OAS), Guaranteed Income Supplement (GIS), and the survivor’s allowance for people age 60-64.

“We don’t want to leave any money on the table,” said Schulte. “We’re trying to get as much money into the hands of seniors as possible.”

Here are the highlights from the Seniors Minister’s presentation, complete with links to relevant CRA documents and information.

Tax Clinics: If you have a modest income (less than $35,000) and a simple tax situation (you aren’t claiming investment or rental income), you may be able to get your taxes done at a volunteer-run clinic. If you qualify, you can do them by phone, videoconference or through a document drop-off. To find out if there’s a clinic near you offering this service, click here

COVID-19 Payments to Seniors: In July 2020, many seniors received a one-time payment ($300 for those receiving Old Age Security and $500 for those receiving the Guaranteed Income Supplement) from the federal government to help offset the costs of the pandemic. This payment was non-taxable — you do not have to claim it as income.

GST/HST Credit: People with low or modest income may qualify for this credit to offset some of the GST/HST expenditures. This credit can amount to $451 per year for singles and up to $592 for those who are married or common law. When you submit your taxes, the CRA will automatically determine your eligibility. Your spouse or common-law partner must also file taxes so the CRA can calculate household payments. For more information, click here.

Medical Expenses: Medical bills add up and claiming these expenses on your tax return will help you get back some of that money. There’s a wide range of products, procedures and services that qualify for this non-refundable tax credit, such as medical supplies, dental care and travel expenses. You can claim medical expenses for yourself, your spouse or common-law partner or for children 18 years of age or under. Remember, you can only claim the part of the eligible expense that you have not been reimbursed for. For more information on what you can or cannot claim, visit the CRA’s medical expenses page.

Caregiver Amount: If you support your spouse, common-law partner or a dependent over 18 with a physical or mental impairment, you may qualify for the Canada Caregiver credit. This allows you to claim up to $2,273 for the spouse or common-law partner amount and lower-income Canadians may claim more. You do not have to file documentation when you claim the Caregiver Amount but he CRA may ask for a signed statement from a medical practitioner showing when the impairment began and what the duration of the impairment is expected to be. Click here for more information.

Disability Tax Credit: This non-refundable tax credit allows people with disabilities (or those who support people with disabilities) to reduce the amount of income tax they may have to pay. Those eligible can claim the disability amount of up to $8,576 on their return. You can also use the DTC to reduce your provincial or territorial taxes owing. To be considered for the DTC, the CRA criteria outlines that the person must have “a severe and prolonged impairment in physical or mental functions” that affects the “basic activities of living.”  To apply, you will need to fill out the Disability Tax Credit Certificate. (A medical practitioner, your doctor or nurse practitioner, will have to fill out Part B of the form.)

Home Accessibility Tax Credit: If you have made renovations on your house to make it more accessible, you may be able to claim this credit. You must be 65 or older (or eligible for the DTC) and own your own home in Canada. If you’ve made upgrades to improve the safety or accessibility of your living space, you can claim up to $10,000 per year in eligible expenses that could result in a tax credit of up to $1,500. For more information, click here.

Pension Income Splitting: If you are receiving payments from your pension plan and meet certain requirements, you may be able to transfer up to half of your eligible pension income to a spouse or common-law partner, thus reducing your tax owing. If you decide to split your pension income, you must deduct the amount you are transferring and your spouse or common-law partner has to report this as income on their tax return. When you file your taxes, you must fill out the Joint Election to Split Pension Income form. Remember, you cannot split CPP income or OAS. For more information on pension income splitting, click here.

Transferring Credits: In those years when you have unused tax credits, you may be able to transfer them to your spouse or common-law partner to reduce his or her tax bill. The list of credits you can transfer include the Age Amount, Canada Caregiver Amount, Pension Income Amount, Tuition Amount and the Disability Amount for Self. To learn more about transferring credits, click here.

Avoiding Scams and Frauds: One of the more alarming scams related to income tax is the email, phone or text message threatening that you will suffer major consequences unless you pay back taxes owing to the CRA. The goal of the scam is to worry you into sending money or, worse, revealing personal banking or credit card information. Here are some useful tips to recognize it’s a scam: the CRA never sends aggressive messages and certainly doesn’t threaten arrest over the phone; it will never demand you pay taxes by Interac e-transfer, Bitcoin or prepaid credit cards; it will never send a text or email with a link to your refund; it will not send you a link to an online form asking you to fill out personal or financial details. To stay informed on the latest CRA scams and frauds, click here.

Updating Personal Information
Keeping your contact information updated will guarantee that you continue to receive your benefits and CRA correspondence on time and to the right address. If you’re moving, have changes to your marital or residency status, or if your spouse or common-law partner dies, you should inform the CRA as soon as possible by calling 1-800-959-8281. Or, you can make the changes using MyAccount, the CRA’s online web portal.

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