The 2021 tax season began Monday and the deadline to file your taxes is May 2.

The deadline to contribute to RRSPs in order to have it included in this year’s income tax is March 1.

For a number of people, the pandemic will once again impact returns.

As direct investing and cryptocurrency gain momentum with new users, experts say it’s important to keep good records of exchanges for tax purposes or you could risk being audited.

IF YOU HAVE RECEIVED A COVID-19 GOVERNMENT RELIEF PACKAGE(S):

H&R Block senior tax specialist, Josee Cabral says each relief package is slightly different.

“For those who have been on COVID relief for the second year now, (you) should probably look at a pretty similar income tax this year although there was a bit of income tax withheld at the source,” she said.

“Although they should still expect to pay a bit of income tax so please put some money aside,” she suggests.

Andrew Bauer, University of Waterloo associate professor and Canada Research Chair in Taxation Government and Risk, says the deadline for certain interest charges in relation to relief packages has also been extended for some.

“In 2020, people that had under $75,000 of income that received one of these benefit payments that filed a return could get a deferral on when they had to pay any taxes owing,” he said.

In addition, “that no-charging of interest is still continued so you have up until April 30 of this year to pay your balance owing of 2020, if any, and still not have any interest paid.”

However if you don’t meet that deadline, interest will still start to build Bauer said.

WORK FROM HOME:

In terms of calculating your work from home return, there are two options. The quick calculation method or the longer method which involves receipts, proof of utilities and other expenses.

If you opt for the quick method, this year you could see an extra $100 dollars in your return compared to what was offered last year.

In 2020 when the work-from-home directive started later in the year, 200 days could be counted at $2 a day for a total deduction of $400.

But for 2021, the government is recognizing a maximum of 250 days at $2 a day for a total deduction of $500.

“To be able to qualify for that simplified method, you have to have worked from home for four consecutive weeks, where 50 per cent of your time was at home,” Bauer said.

Experts says the quick method is often best for homeowners, because the square footage of your office space is considered in comparison to utility bills.

For example, only 10 per cent of your utility bill may account for the one room used as an office if you live in a four-bedroom home. In comparison, a one or two-bedroom apartment would use a higher percentage of their overall utilities in relation to the at home office space.

Renters will also likely benefit from the longer method because, “You cannot claim either your mortgage or the interest paid on mortgage, but if you rent then you can go ahead a take a portion of your rent that's paid,” Cabral said.

Additional items can also be claimed with a T2200 form from your employer similar to utilities.

“Some of your expenses related to internet or phone if you have to use those for work,” Bauer explained.

DIRECT INVESTING AND CRYPTOCURRENCY:

The pandemic encouraged a lot of people to learn new skills. For some, that included direct investing.

If you made a capital gain or a capital loss on investments, those do need to be declared for income tax purposes.

“These are all things you need to keep a registry of then you need to declare it on your income tax so that there's a calculation either of a capital gain or capital loss,” Cabral said.

“Do it yourself investing is great,” Bauer said, adding that he just started teaching a course on the topic at the University of Waterloo this year.

He explained that the process can be made simple when using apps, like Wealth Simple, Quest Trade or similar banking apps because in most cases, the software will keep track of records for you.

Bauer says when it comes to cryptocurrency the best thing to do is to consider it a commodity in the eyes of the CRA.

“It’s kind of like gold,” he said.

He added much like commodities there aren’t consistent or don't have easy exchange rates when it comes to cryptocurrency, "it's still new."

“Everyone is still kind of trying to figure it out and that includes government and the CRA,” Bauer continued.

Cabral says her number one piece of advice in terms of cryptocurrency is to have a registry of all transactions.

“As of right now there is no form of registry that is available on the CRA website, it is left up the individual to keep a record of that,” she said.

“Sooner or later there will be more verifications on that so I do recommend that people start, as of now, to have that discipline and have the registries and declare the income,” Cabral said.

Bauer said income only needs to be declared when the currency is traded for a capital gain or loss.

“What the means is that if you purchased cryptocurrency and it’s gone up in value and then you sold it, then you are going to have a capital gain to recognize.”

”Or if you sold it at a loss, you have a capital loss,” Bauer further explained, “which you can use to offset other capital gains.”

If you’ve bought and you continue to hold it, despite its value change, it does not need to be declared.