Here’s what to do if you owe taxes because of CERB

Did you receive COVID-19 Government Assistance such as CERB and afraid you may have to pay taxes? If so there’s still time to make a difference on your 2020 tax payable amount.

Purchasing RRSPs can help reduce your income tax payable. This is especially important if you received any Government Assistance due to COVID-19 that was not taxed at the source. You can purchase RRSPs for 2020 income tax return up until March 1, 2021.

How much RRSPs should I purchase?

On your notice of assessment from Revenue Canada for the 2019 tax return there will be an amount called: RRSP contribution room for 2020.  This number is the maximum amount you can contribute towards RRSPs for 2020.

If you owe money to Revenue Canada or think you may, consider paying yourself first and purchase RRSPs to reduce your taxable income.  You can contribute to RRSPs up until December 31 of the year you turn 71. 

If you have any questions about your 2020 tax return or looking for a trusted CPA reach out to me