Filing Your Taxes When You Have No Income

Did you lose your job? Are you on maternity or paternity leave? Are you in-between jobs. Have decided to go back to school in order to further your career once you get back into the workforce? Or have you decided to take an extended sabbatical in order to refresh and take a breather from the everyday hustle and bustle of work life?

Whatever your reason for not working, you may be wondering whether or not it’s still necessary to file a tax return. You might think there’s absolutely no reason to do so, especially since you did not make any money and therefore have nothing to pay income taxes against. In a sense, you may be right. You technically don’t have to file your income taxes if you have no income to claim, but only if other circumstances don’t apply.

Will I be able to buy a house if I owe taxes? Find out here.

On the other hand, there may be some valid reasons to still consider filing your income taxes despite not having made any income in the previous calendar year. But before we list these reasons, here are some scenarios that would require you to file your income taxes in the next tax filing season:

You have taxes owing
You received a request to file a tax return from the Canada Revenue Agency (CRA)
You and your spouse/partner are splitting your pension income
You received Working Income Tax Benefit (WITB) payments
You sold off real estate or investment shares, particularly if you made a profit from such sales
Your old age security or employment insurance benefits had to be sold off
You still have some amount of your RRSPs to repay if you used it for things such as the Home Buyers’ Plan
You made contributions to the Canada Pension Plan (CPP)
You paid employment insurance premiums on self-employment earnings

As you can see, there are many scenarios whereby you would still be responsible for filing a tax return, even if you are not currently working and bringing in a typical income.

Aside from the aforementioned reasons to file a tax return, there are many benefits that you can capitalize on by filing a tax return despite not having a job:

To claim a tax refund
To claim the Working Income Tax Benefit (WITB)
To receive child benefits
To receive the GST/HST credit
To apply an incurred non-capital loss on a future tax return
To carry over any unused part of your tuition
To contribute any income to an RRSP to keep the deduction limit in the future
To carry over any unused investment tax credit you incurred
If you receive the guaranteed income supplement under the old age security program

Does owing taxes to the CRA affect my credit score? Read this.

Final Thoughts

Clearly, there are several scenarios that would not only require you to file a tax return even if you’re not working, but there are also many cases where you would stand to benefit from such filing in the event that you are not necessarily obligated to file.

If you want to take advantage of any one of the above benefits, filing a tax return will need to be done, regardless of whether or not you are working and bringing in an income. As a general rule of thumb, consider filing your taxes, no matter what your employment status may be.