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Tax Alerts
May 17, 2021

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February 16, 2021 - UPDATED March 31, 2021

Dear Valued Client/Tax Professional:

We hope this finds you well after a challenging year for all. The IRS opened their filing season as of February 12, 2021 and we will begin processing US returns near the end of February. Please note that the filing deadline has not changed from prior years – US taxes are due MAY 17, 2021.

For 2020, the IRS has made many changes primarily due to Covid-19 relief measures with the majority applicable to those living in the US, except for Stimulus checks. Please note this letter only relates to the U.S. tax returns and all amounts are in US dollars. Please refer to our separate letter regarding information for Canadian tax filings. Thank you to everyone for your patience this last year and wishing you a healthy year.


Please contact us if you would us to email you a PDF of this newsletter.

Dear Valued Client:

Our partners Caroline Paterson, CPA, CGA and Sheila Henn, CPA, CA would like to take this opportunity to provide information for this 2020 tax return season as we begin another challenging year. You will find more information on our website www.patersonhenn.com. Our website is updated often with our hours, newsletters, services and more. Due to the many changes this past year, this information is based on the best of our knowledge to February 11, 2021. Currently, the filing deadline has not been extended. We recommend that you file your personal tax return by April 30th (or making an instalment by April 30, 2021 for individuals with self-employment income with a filing deadline of June 15, 2021).


Most taxpayers sit down to do their annual tax return, or wait to hear from their tax return preparer, with some degree of trepidation. In most cases taxpayers don’t know until their return is completed what the “bottom line” will be, and it’s usually a case of hoping for the best and fearing the worst.


Our tax system is, for the most part, a mystery to individual Canadians. The rules surrounding income tax are complicated and it can seem that for every rule there is an equal number of exceptions or qualifications. There is, however, one rule which applies to every individual taxpayer in Canada, regardless of location, income, or circumstances, and of which most Canadians are aware. That rule is that income tax owed for a year must be paid, in full, on or before April 30 of the following year. This year, that means that individual income taxes owed for 2020 must be remitted to the Canada Revenue Agency (CRA) on or before Friday April 30, 2021. No exceptions and, absent extraordinary circumstances, no extensions.


By the time most Canadians sit down to organize their various tax slips and receipts and undertake to complete their tax return for 2020, the most significant opportunities to minimize the tax bill for the year are no longer available. Most such tax planning or saving strategies, in order to be effective for 2020, must have been implemented by the end of that calendar year. The major exception to that is, of course, the making of registered retirement savings plan (RRSP) contributions, but even that had to be done on or before March 1, 2021 in order to be deducted on the return for 2020.


When the pandemic was declared just over a year ago, the federal government announced a wide range of benefits to help mitigate the financial stress experienced by those who lost jobs or saw their hours (and income) reduced.


While the obligation to file a tax return recurs annually, that return form is never exactly the same from year to year. Tax brackets and allowable deduction and credit amounts change each year and, more significantly, new deductions are provided for and new credits allowed or eliminated.


Each year, the Canada Revenue Agency (CRA) publishes a statistical summary of the tax filing patterns of Canadians during the previous filing season. Those statistics for the 2020 filing season show that the vast majority of Canadian individual income tax returns — nearly 90%, or almost 28 million returns were filed online, using one or the other of the CRA’s web-based filing methods, or by telephone. The remaining 10% of returns were paper-filed.


Income tax is a big-ticket item for most retired Canadians. Especially for those who are happily free of the requirement to make mortgage payments, the annual tax bill may be the single biggest annual expenditure they are required to make. Fortunately, the Canadian tax system provides a number of tax deductions and credits available only to those over the age of 65 (like the age credit) or only to those receiving the kinds of income usually received by retirees (like the pension income credit), in order to help minimize that tax burden. And, in most cases, the availability of those credits is flagged, either on the income tax form which must be completed each spring or on the accompanying income tax guide.


Over the past month, millions of Canadians have received what was probably an unexpected (and unwelcome) communication from the Canada Revenue Agency (CRA), in the form of a T4A slip. That T4A slip lists the amount of pandemic benefits which were received by the individual in 2020 and represents, more significantly, the amount which must be reported on that individual’s income tax return for 2020 — and on which tax must be paid.


Two quarterly newsletters have been added—one dealing with personal issues, and one dealing with corporate issues.


Chartered Professional Accountants