Overview

If you’ve received a T1198 (Statement of Qualifying Retroactive Lump-Sum Payment) or a letter in place of a T1198, you need to follow specific steps to file your tax return. This letter serves the same purpose as the T1198 form and contains all the necessary information to complete this section in Wealthsimple Tax.

How to report income from a T1198

Follow these steps to file your return:

1. Prepare your return in Wealthsimple Tax as usual.
2. Add the Statement of Qualifying Retroactive Lump-Sum Payment section to your return.
3. In the T1198 entry, locate the following fields at the top of the section and fill them in using your slip or letter:
   • Box 68518: Total amount (principal and interest combined), if applicable.
   • Box 68519: Total principal (current and prior years). Enter the total lump-sum principal amount here.
   • Interest: Enter the total interest amount if indicated, or leave blank if not applicable.
   • Principal: Enter the prior years principal amount if separately indicated on your slip.

4. Next, complete the Breakdown of principal (box 68519) section below. This is where you will enter the portion of the principal that relates to each prior tax year. This step is required to clear the validation error that appears after entering your box 68519 total.

   • Select the Box field and enter the applicable box number for each prior year, then enter the corresponding amount in the field beside it.
   • To add additional years, select the empty Box field that appears after each entry.
   • The box numbers correspond to prior years relative to the tax year you are filing for. Use the following reference table to identify the correct box number for each calendar year:

   Calendar Year	Prior Year Reference	Box Number
   2024	1st prior year	68559
   2023	2nd prior year	68558
   2022	3rd prior year	68557
   2021	4th prior year	68556
   2020	5th prior year	68555
   2019	6th prior year	68554

   Note: This table applies when filing your 2025 tax return. If you’re filing for a different tax year, the box numbers will shift accordingly, each calendar year moves one prior year further back relative to the year being filed. 

   Once you’ve entered all year amounts and their sum matches the total in box 68519, the validation error will resolve automatically. 

   If you’re preparing a return for a tax year before 2024, you’ll need to print and mail your return.

   Important considerations

   • The income from your QRLSP also needs to be reported on your return through the relevant slip it was paid on (e.g., T4, T4A, or T4E). Make sure that slip is also added to your return.
   • Include all relevant slips and documents with your mailed return, if applicable.
   • Keep a copy of your return and all supporting documents for your records.
   • Processing times for paper-filed returns are typically longer than NETFILE submissions.

   If you are unsure about how to report your T1198 or have questions about your specific situation, consider consulting with a tax expert.