Will I Owe Income Taxes and Have to Pay Back CERB?

Cerb and Income Taxes

If you received CERB during the pandemic, your tax liability may increase because you didn’t pay taxes at the time you received it – no one did.

Like any income, CERB is taxable, but there’s good news.

There aren’t special tax rates you must pay on any CERB you received. The tax rates are the same rates you pay on your employment income. This makes filing your taxes much less overwhelming than most people thought, but it’s still money you will owe.

How Much Tax will you Owe?

No two people will owe the same amount of taxes. Your tax rate depends on your total income and this year your total income includes all employment income plus any CERB you received. You can check your tax brackets here.

How do you Pay your CERB Tax Debt?

Like any tax debt, to figure out how much you owe, you must first file your taxes. It’s always important to file your taxes on time even if you think you can’t afford the tax debt. Get your taxes in and then take additional steps to manage the debt.

If you can’t pay your tax debt on time, contact the CRA. In most cases, they’ll offer a repayment plan or payment arrangement, but only if you ask. You must be proactive in your request, so you don’t fall behind.

Options if you can’t Pay your CERB Tax Debt

If you can’t pay your CERB tax debt, here are your options:

Apply for Taxpayer Relief

Taxpayer relief is available for those who have extenuating circumstances including unemployment, chronic illness, or a natural disaster. It has to be something outside of your control that stops you from paying the taxes.

File a Consumer Proposal

If you are in over your head in debt, you may consider a consumer proposal. This is a formal request for relief of your debts including your CERB tax debt. A proposal doesn’t eliminate the debt, but it may lower the amount you owe making it easier to afford.

Work with a Credit Counselor

If you’re in over your head in debt and now face tax debt too, get with a credit counsellor. If you free up some of your money by negotiating lower rates or consolidating debt, you may have more money available to pay your tax debt.

The key is not to ignore your debt. If you can’t pay it, work with professionals to find a way to make arrangements. Ignoring the debt only leads to more penalties and interest.

Final Thoughts

Don’t let the thought of tax debt put you over the edge. Yes, it’s another debt and if you’re already struggling it can feel like too much, but there are ways around it.

Contact our credit counselors today for your free consultation to find out how we can help make your tax debt more affordable. Sometimes it just means you need to free up some money by lowering your interest rates on other debts or negotiating other payment arrangements.

How Reducing Interest Rates Reduces Debt Faster

Pay Down Debt

Did you know that much of your debt consists of interest? This is especially true if you’ve carried balances for a long time.

For example, if you have a $10,000 balance at 20%, it will take you 60 months to pay off the debt with a $264 monthly payment and a total of $5,896 paid in interest. Your $10,000 would cost you $15,896, which is made up of 37.09% interest charges.

Reducing your interest rates can help you save money and pay your debt off faster.

Continue reading “How Reducing Interest Rates Reduces Debt Faster”

Senior Debt Forgiveness – What you Must Know

If you’re a senior with debt, you may feel like you’re up a headed up a creek without a paddle. Living on a fixed income makes it hard to take care of anything except your daily costs of living, but fortunately, there are ways to work out your debt so you have peace of mind and can enjoy your golden years.

Here are the simple steps to take.

Figure out Where you Stand

First, get an honest look at your situation. Don’t sugarcoat it, that won’t get you anywhere. Pull out all bank statements and credit card statements. Categorize your spending and total up your debt.

Continue reading “Senior Debt Forgiveness – What you Must Know”

Canadians on the Brink of Bankruptcy – Here’s what to Do

If you’re feeling financial stress, you not alone. Over half of Canadians are within arm’s reach of financial insolvency thanks to the COVID-19 pandemic. The numbers are at a five-year high and don’t seem to be falling anytime soon.

Millions of Canadians wiped out their savings accounts during the heart of the pandemic and others relied on credit cards to make ends meet. But where does that leave them today?

If you’re coming off a job loss, shuttered business, or increase in bills, bankruptcy may seem like the only answer, but it’s not. Here’s what to do instead.

Continue reading “Canadians on the Brink of Bankruptcy – Here’s what to Do”

Black Friday, Cyber Monday and Holiday Spending

680 CJOB, Winnipeg’s news talk radio, Hal Anderson recently invited Creditaid’s, Brian Denysuik to join him on air to help get people through the holiday spending season. Brian provides advice on how not to overspend including a few tips on how to create a “Save to Spend” holiday plan to help alleviate stress and avoid going into debt this holiday season.

Listen to the discussion below.

Help Your Debt, Help Your Health

As more studies are done on the correlation between physical and financial health, one thing has become crystal clear: the more affluent you are, the better your physical health is likely to be. According to the Public Health Agency of Canada, social and economic status “seem to be the most important determinants of health”.

Help-your-debt-and-healthThere are a number of reasons for this. The obvious is that people with higher incomes are likely to be better educated about their health, and have better access to nutrition and medical services.

There’s also the emotional toll that a debt load can bring to an individual and a family. No matter what your level of income, if you’re carrying significant debt, it will weigh on you. When that debt load gets out of hand, the collection calls from creditors and the “balancing act” of weighting credit card and loan payments against the necessities of life can produce high levels of stress, which will have an impact on your health. Credit card debt is the most significant detractor, because it’s the most available and carries the highest interest cost.

For Manitobans struggling with debt, the first steps to recovery are the most difficult. You must analyze your budget, and take a detailed look at your obligations and their accompanying interest rates. From there, you need to create a realistic payment schedule, one that allows you to take care of your family’s needs while reducing the amount you owe.

At Creditaid, we understand the physical and emotional toll that spiraling debt can have. When you contact us, we’ll do our best to help you by offering counselling regarding your debt situation, management of your debt, and look at a consolidation strategy when appropriate.

Contact us anytime online or by telephone at (204) 987-6890. We can help you take those important first steps toward a healthier, debt free life.

Changes Are-a-Comin’

‘I’ve always wanted something really cool like this to happen!’ That’s what I excitedly exclaimed to my ‘twenty something’ buddy as we prepared for an emergency landing into the Toronto Airport. We were thrilled to be along for the ride. We were young.

We landed without incident, but what youthful carelessness to actually revel in a dangerous moment.

Proverb says: ‘Be careful what you wish for.’ A lot of folks wish for some kind of change – in their marriage, in their jobs, where they live. When separating, or thinking of separating or negotiating the terms of your separation, be careful. Things can change. And this can apply to the parenting plan you and your ex and the negotiator put together.

Try to stay flexible about the future to enable you to address possible changes in circumstances. Two biggies are changing jobs and moving out of province. For example, a couple might have a legal agreement with a Parenting Plan that states he gets the kids each July at the old family cottage, while she gets them all of August in the city. They live in Brandon, Manitoba and he has just been laid off but accepted a new job at lower pay in Estevan, Saskatchewan, three hours away. His new employer won’t give him that same vacation time he enjoyed before so he doesn’t have the freedom of a month at the cottage with the kids next summer. But she has already made plans for that July, having committed to her own kayaking holiday off Vancouver Island. To further complicate things, the Parenting Plan was based on the expectation of a certain level of spousal and child support. She feels undermined by his change of circumstances – she has already pre-paid for the kayaking holiday and part of her ability to afford it was dependent on the spousal support payments. On the other hand, he didn’t willingly lose his job and hoped to replace it with something even better with even more pay.

People can change their minds and their agreement but it does require consensus. A big ‘but’ is ‘But what if one side insists on the existing agreement? What if she pushes for compensation for her outlay of cash for her holiday? And what about the kids and those two summer months? What happens there?’ I don’t have the answer, but an overly rigid plan can be suffocating. The reality is, they need to compromise. It is likely his spousal support and even child support payments will be adjusted downwards to reflect his lower income. Perhaps he can make some contribution to the pre-paid holiday, which she now can’t afford nor has that time free to go. As to what to do about the summer, not sure I’d want to be in the same room when they discuss it, but one way or the other they will figure it out. [I am letting him off the hook too easily, I know; surely he could have discussed this with her and the kids before committing to the new, not so great job out of province. But maybe he was desperate, maybe he had no choice].

Life is full of changes: some too hot, some too cold, some just right. The Goldilocks zone of being just right is where you want to be, but more often than not, like picking your parents, hard to accomplish. Plans emanating from separation and divorce should not be handcuffs, albeit, many feel the obligations for payments, which are just that, financial payments. If they are ‘court ordered’, well, you’re outside the Goldilocks zone, and unfortunately traditional divorce attracts court orders. A mediated divorce can be more flexible while still leaving the party in greatest need with a leveraging stick if need be. I am not advocating delinquency, but if you both start with a cooperative approach you can better handle inevitable changes in circumstance. And often times it’s the one in greatest financial need that requires the flexibility.

Another big change can be re-marriage or ‘re-partnering’ as I have heard it described. One of the divorcing couples entering a new relationship can send ripples, even waves, across what were reasonably calm waters. The kids too can find themselves rising and falling with the waves. One of the things we caution couples in the midst of the process, is to avoid new relationships and if they are already in one, to keep it more or less to themselves. But once the dust has settled, hearts expand and that leads to dancing and …well you get the picture. And why not? Love makes us happy. In fact, when I have a couple going through the process, I can usually tell which of two have someone else already in their life – they usually smile more – and I know that at least one of these folks is, if not really happy, at least sort of happy, and will therefore be a little more focused on getting the work done. I do feel sorry for the lonely one though – dejected, perhaps feeling still in love with their departing spouse, wondering if the pain will ever go away. There really isn’t a plan that can address re-partnering unless it’s tied to spousal support. For example, they might agree that spousal support ends if the recipient remarries but that’s more to do with financial issues than Parenting. One couple agreed not to introduce a new partner to the kids for at least a year, but outside of that, when your ex finds someone, and especially if it involves your kids in any way, you’ll have to adjust your thinking. The wise one on the mountain says you need to be happy for him/her. That little broken hearted egomaniac on your shoulder will suggest other actions.

The main take-home message about divorce related plans, be they Parenting or otherwise, is: it can cut both ways. An old professional mediator in the investment business told me that he thought a good deal was when neither side was thrilled with the terms. Maybe a bit too dreary but something to keep in mind when dealing with family.

Originally published by Fairway Divorce Solutions.

Divorce is a painful process and the traditional adversarial system can make a painful process even worse. Fairway Divorce Solutions® is changing the way divorce happens by providing families with a safe and comforting environment where they can make well-informed decisions. People leave The Fairway Process™ with A Clear Road to a New Life®. Our job is to bring you and your spouse to resolution. The traditional process of divorce is daunting, expensive and stressful. At Fairway we work with you every step of the way to avoid uncertainty, unnecessary conflict and expensive litigation. Working with both amicable and conflicted couples, Fairway has brought thousands of couples to resolution, helping them move on in a positive and productive way. Reduce cost, reduce stress, preserve assets and protect the kids — contact us today by calling (204) 414-9181 or visit us online at FairwayDivorce.com

Scared to Pick Up the Phone?

Do you panic every time the phone rings? At Creditaid, we help people take back control of their lives. Many of the people we have helped have been where you are today – too scared to answer the phone or check the mail when it is delivered, missing out on spending time with family or friends for fear of spending money that you don’t have. Life is too short to live in constant fear – it is time to take control, and start living your life again. Call to speak to one of our qualified counsellors who will walk you through each step of the way to becoming debt free – whenever you’re ready, just give us a call at 204-987-6890.

Do you worry when the phone rings?

Do you toss and turn at night, worry every time the phone rings or hesitate to check the mail for fear of seeing more bills? It’s time you start living your life again. Call us today.