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[Updated 2021] How to Prepare for CERB Tax Payments and Payment Deferrals

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To make ends meet, many Canadians have taken advantage of CERB and payment deferrals. It was a tough year (2020) for the majority of Canadian households due to the impact the COVID-19 pandemic has brought to everyone.

Most jobs were affected, some people lost theirs while others had their work hours reduced. This had become the main reason Canadians relied on CERB and payment deferrals. If you are one of the many who took CERB and/or payment deferrals, you need to know this information to be prepared.

CERB (Canada Emergency Response Benefit)

The Canada Emergency Response Benefit provides $2,000 monthly assistance to individuals who are directly affected by COVID-19. This government benefit serves as a temporary replacement for paychecks from work.

However, here’s the trick; the amount is taxable but no tax was withheld and full amounts were given to the recipients. Much unlike regular taxable salary wherein tax is automatically deducted from the gross amount beforehand.

The money you take home from your payroll is yours to spend without the worry of having to shelve off extra cash come tax season. In the case of the $2,000 CERB grant, however, taxes were not deducted beforehand, meaning the government will take back a portion of the amount in taxes.

Between April and June, which is the tax season, those who received the CERB grant will have to pay the tax, the amount of which depends on the overall income of the recipient for the year. The best method to determine the tax value is to use the government’s federal and provincial tax rate guidelines.

To be prepared for this, you need to start saving now. This is an important bill you must pay to avoid losing access to government support in the future.

Mortgage Payment Deferrals

If you are deferring your mortgage payments, you are only skipping the principal but not the interest. But at least you will have some breathing room to utilize your budget for something more important or urgent.

Some banks had given more than a month of payment deferrals, this means that interests have built up during the deferral period. Things can get more complicated when your payment deferral ends, because the accrued interests will be added to the principal of our mortgage balance..

As a countermeasure, you may pay for the total interest accrued during the deferment period to avoid it from accumulating more interests. Make sure to get in touch with your lender if you plan on doing this, to ensure that the amount you will pay be allocated directly to the interest payment, not to the principal.

Rent Payments Deferrals

Landlords have an important role in helping renters during these extraordinary times. Renters who are facing financial difficulties should talk to their landlord to negotiate rent relief.

If you find yourself financially affected by the COVID-19 pandemic and unable to pay rent, call your landlord and explain the situation. This is your best shot because there is no federal bill mandating the deferment of rent payments.

For some provinces like Ontario, all eviction has been stopped until further notice. They also encourage landlords and tenants to work together with an agreement during this difficult time to keep tenants in their homes. Landlords cannot charge fees and penalties for late payments under the Residential Tenancies Act.

Preparing for CERB Tax Payments and Deferral Payments

If you have been using CERB or payment deferrals without saving up or setting money aside, you could find yourself in trouble with more bills to pay very soon. But don’t worry, you are not alone; many Canadians face a similar situation. What matters now is that you look over the situation and create a plan to get prepared as soon as you can.

Analyze your budget, cut down expenses that aren’t necessary for the next couple of months then start saving money that will be allocated to pay your Taxes and interests that has accumulated during the payment deferral period.

What You Can Do If You Are Unprepared for Incoming Bills and Unexpected Expenses

Now is not the time to doubt and hesitate, instead it’s the best time to know as much information for help or assistance as you can. If you feel overwhelmed by bills, we can help!

We offer a free consultation, no risks, no obligation. We can help reduce up to 75% of your debt by consolidating all your debts including CERB, Credit Cards, Personal Loans, Car Loans, Taxes, HST, 407, Household Bills, Payday Loans, and Student Loan.

If you have $10,000 or more debt, don’t panic. Our Professional Debt Consultants are available to provide you debt relief options via Zoom or Phone Calls – you don’t ever need to leave your home.

Click on the button below to get started, get a free debt savings estimate in less than 60 seconds.

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