Millions of Canadians have received payments from the Canada Emergency Response Benefit (CERB) this year and are not aware that these payments are a Taxable Benefit.
What does this mean? Unlike a normal paycheque from an employer that deducts the income tax off your gross pay already, there are no taxes taken off the amount you received from the Government.
How much tax will I have to pay on CERB?
This depends entirely on how much money you make in total for 2020. If you make very little before and after receiving the maximum $12,000.00 for the CERB, you may not have to pay any taxes depending on the province you reside in. The basic personal exemption for federal taxes for 2020 is $13,229.00, so if you make less than that this for the entire year, you won’t owe federal income taxes.
Once you exceed those personal exemption amounts, the amount owing rises into the thousands quickly. Everyone’s situation is different, so you will have to assess your own. For this, you will need to know how much you received from the CERB and how much you made or will make from other income sources for 2020.
Tax calculator to estimate your income tax
Once you have these numbers, you can figure out how much you are likely to owe in taxes. You can use this tax calculator with Intuit Turbotax to calculate your estimated income tax you will be paying in the province you reside in.
To make it easier, we suggest to enter all the income in one total that you are expecting to receive this year for 2020 including your regular employment income plus the CERB income under the Employment Income area. This calculator will then show you approximately how much you will be owing and what you need to budget accordingly.
Consumer Credit Counselling
If you are having trouble budgeting and have unsecured debt to repay including income tax debt owing, please contact us for a free consultation at 1-800-565-4595 or email [email protected] and we can look at helping you with a Debt Management Plan or another consolidation option.