Whatever your situation in life, it may be possible that you do not work and earn an income. Perhaps you lost your job or chose to stay home and care for your children.
No matter your situation, you’re probably wondering whether or not you have to file your taxes at all.
While federals laws do not require you to file a tax return if you have no income to claim, it’s important to determine if there are other situations that may require you to.
Even if no situation applies to you where you are required to file a tax return with no income, there are many benefits to doing so anyway.
So, if you find yourself facing tax time with no income to claim, here are a few things you should consider before not filing:
Reasons to File Your Taxes With No Income
Even if you’ve earned no income for the year, there are certain situations where you definitely need to file your taxes:
- You owe taxes.
- The CRA (Canada Revenue Agency) has requested that you file a tax return.
- You received any CWB (Canada’s Worker Benefit) payments.
- You sold any real estate or investment shares – whether or not you made a profit from them.
- You had to repay any OAS (Old Age Security) or EI (Employment Insurance) benefits.
- You used some of your RRSPs (Registered Retirement Savings Plan).
- You contributed to CPP (Canada Pension Plan).
- You paid any EI premiums on self-employment earnings.
- You are splitting a pension income.
If any of these situations apply to you, you are still responsible for filing a tax return.
The Benefits of Filing a Tax Return With No Income
Even if the above situations do not apply to you, there are benefits to filing a tax return even if you have no income to claim.
Federal and provincial benefits are tied to your tax return and your reported income (even if it’s zero) will determine which ones you are eligible for.
So before you decide to forego filing due to no income, consider these benefits you could miss out on:
If you are eligible to receive the Good and Services Tax or Harmonized Sales Tax credit, you must file a tax return in order to receive these payments.
Canada Child Benefit
If you have children under the age of 18, you qualify for the Canada Child Benefit (CCB) – with the amount you receive depending on your children’s ages and your income.
The CCB can also include the Child Disability Benefit and any provincial programs you may be eligible for.
Not filing a tax return excludes you from these payments.
If you attended a school, you can claim eligible tuition fees on your tax return.
While you won’t receive any money back from them (they are a non-refundable credit), they must be reported for the current tax year in order for you to carry them forward or transfer them.
Otherwise, if you don’t file a return and claim them, you cannot use them on future tax returns.
If you have a child that attends daycare, you could be eligible for a daycare subsidy depending on your income.
The only way to apply for this program is to have a tax return stating your earnings since your eligibility is determined by your reported household income.
This also extends to subsidized sports and extra-curricular activities for your child.
Oftentimes, parents need to submit their reported income in order for their children to secure a student loan.
Since student loans are another needs-based program dependent on your income, it’s important that you have a tax return to include in the application process.
Assisted Living/Nursing Homes
For seniors looking for assisted living or nursing home accommodations, or those with a disability, the payment amount depends on affordability which is determined from reported income.
Without a tax return to prove earnings, seniors and those with disabilities will miss out on reduced payments for living arrangements.
How to File a Tax Return With No Income
When it comes to filing your taxes with no income to claim, the process is pretty simple: File as normal and don’t input an income.
However, the thought of paying someone to file taxes when you earned no income may seem redundant and inspire you to skip out on filing them.
Before you do, consider these options for filing your tax return for free:
These programs allow you to input your information and send your tax return directly to the CRA through NetFile.
Why are they free? Many of these software and tax companies offer free access to filing your tax return as long as the return is simple and straightforward – as would be the case if you are claiming no income.
Otherwise, more complicated tax returns require a fee to use the software.
Alternatively, you can also file your taxes the old-fashioned way by picking up the necessary forms and mailing your claim directly to the CRA.
To File Or Not To File?
That is the question. The simplified answer is that, if you earned no income and do not need to file, you don’t have to file.
However, it’s important to take the above-mentioned benefits into consideration. If you are eligible for these programs, why not take advantage of them?
Otherwise, if you are not sure if you should file your taxes or not without an income, you can always speak to our professional and knowledgeable accountants at Liu & Associates.
We can help guide you to making the best decisions when it comes to your tax claims as well as your financial health.