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The Canada Revenue Agency opens its NETFILE service on Monday, Feb. 21, so keeners can start filing their 2021 taxes electronically. Employers, charities and others have until the end of the month to send out T4 slips and receipts.

Filing income taxes can be a complicated, cumbersome and mind-boggling process even for those who like math. It’s even more complicated because of COVID and special benefit payments, repayments and the working from home office expense process.

Many people were forced to work from home because of COVID so they can now claim part of their home expenses on their taxes.

All it takes is a calculation of what percentage of the home is used for work, collecting a pile of receipts, then claiming the office portion of things like heat, light, water, maintenance, office supplies, internet, phones, etc.

If you’re a renter, you can claim a share of your rent but, if you’re a homeowner, mortgage payments don’t count.

For Gerry Vittoratos, that calculation is further complicated by the fact that he not only works out of his basement office but also out of his living room, so he needs to make two separate calculations, one based on the percentage of time he spends in the shared living space of his house.

“It’s a mess,” Vittoratos, national tax specialist for UFile, which sells a software program for doing your taxes, told iNFOnews.ca. “Then they wonder why people don’t get interested in taxes? They make it so cumbersome for regular people who might have a passing interest but don’t want to make it their career.”

Because of COVID, the government simplified the home office claim process for the 2020 and 2021 tax years by creating the Temporary Flat Rate method.

That allows people who worked at least 50% of their time at home for at least four consecutive weeks because of COVID to claim $2 a day, to a maximum of 250 days ($500).

That eliminates the need to keep receipts and make complicated calculations and you don't have to get a form from your employer saying you were required to work from home.

Vittoratos recommends homeowners who qualify just claim the $2 a day but those who rent may do better doing the detailed calculation because a portion of their rent can be claimed.

Now that B.C. has shifted its lockdown rules requiring people to work from home when possible, some may choose to continue to work from home. If they choose to work from home but are not required to do so, the temporary flat rate system won’t apply.

There are other COVID-related tax changes this year people should be aware of, Vittoratos advises.

One is dealing with repayments.

When the CERB (Canada Emergency Response Benefit) came out in 2020, some people were incorrectly paid it or overpaid and had to pay it back in 2021.

Normally that would be the end of it. They earned it in 2020 so had to pay taxes on it in 2020 and those are two separate tax years. But the government now allows people to go back and have their 2020 tax returns adjusted. They can do that by filing an adjustment request.

Another change is to the Canada’s Workers Benefit that affects all low income earners, which may include those on reduced hours because of COVID.

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It’s a refundable tax credit – which means people get cash back from the government even if they were not in a taxable income bracket. They do have to earn some income to qualify.

It used to be that the credit amount was reduced for a single person once their income reached $13,000. The credit decreased as income increased from there until it was eliminated.

That clawback level has now been raised to $23,000 and the amount for a family has gone up to $27,000 from $17,000.

Another feature is that, for a couple, the lower income earner can be credited with up to $14,000 thus reducing their combined income.

Sound a bit too complicated?

That’s where UFile, and more than a dozen other tax preparation software programs come in.

“It’s easy because – not just us, I believe our competitors do too – we have an interview-based approach, meaning that we’re asking you questions along the way as you go through,” Vittoratos said. “You still have to do some things. The program doesn’t know what slips you have. There’s a section where they ask what you have. Do you have business income? OK, tick that box. Do you have capital gains, click that box and so on. It asks you questions. You plug in whatever amounts it asks you and it spits out a return.”

There are a couple of caveats. For one, you need to have MyAccount set up with Canada Revenue Agency.

For another, UFile and many others sell their software, although the Canada Revenue Agency website has a list of free and “pay what you want” options. The File option, and some others, cost $19.95 per tax year but that allows for multiple tax forms to be filed.

Vittoratos suggested that the time saved doing taxes electronically and the speed at which the return cheque arrives are well worth that cost.

And, for many people in a joint tax relationship or with children, these programs are likely to pay for themselves by finding savings the average tax filer would never figure out.

“In the (Income Tax) Act there are things you can transfer between you and your spouse – medical expenses, for example, or donations,” Vittoratos said. “These are done automatically by the software which you may not do if you’re doing it by hand.”

People may think some expenses go on one spouse’s tax return and some on the other's where, in fact, they can be pooled for a better tax outcome. Pension splitting is an example of an option where many people may simply split the eligible amount 50-50 between spouses. The program will calculate the best division of those assets.

“There are so many of these amounts that are transferrable between spouses or between a child and a caregiver that there’s no way you can figure out every single one, unless you’re very deep into taxation, unless this is what you do,” Vittoratos said.

April 30 is the deadline for filing taxes. Since that falls on a Saturday, the tax return is considered on time if it’s either received by Canada Revenue Agency on or before May 2 or postmarked on or before that date.

Self-employed people have until June 15 to file.

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