In my lifetime (and most likely in yours too), 2020 was a year like no other.
In addition to the unprecedented Covid-19 global Pandemic and lockdowns, oil prices turned negative, the S&P 500 had its largest single-day point drop, protests swept the streets, UK broke off from the European Union, and Prince Harry and Meghan Markle quit the royal family.
So many twists and turns.
We have now become accustomed to Zoom calls, FaceTime video chats, and working from home as the new normal.
If you are one of the millions of Canadians that had to work remotely in 2020, you may have set up a home office in doing your part to help flatten the coronavirus curve. And if so, the question on your mind may be whether you can write off your home office expenses.
You will be pleased to learn that yes, you can claim your Covid-19 Pandemic work-from-home office expenses. But there are some caveats!
In this article, we’ll talk about everything you need to know to claim your home office expenses.
Who can claim home office expenses
If your job entailed working from home before Covid-19, you might be already familiar with the CRA Form T2200 – Declaration of Conditions of Employment. Most people in sales-type jobs that involve a lot of travelling may be well acquainted with the Form T2200.
If you are not, look no further. Form T2200 is typically completed by employers to confirm that an employee is required to work from home. It allows employees to claim employment expenses not reimbursed by their employer in their annual tax returns.
Before 2020 turned the world upside down, you would have been eligible to claim home office expenses if you met all the criteria below:
- Your employer required you to work from home
- Worked more than 50% of the time from home
- Home office expenses are used directly in your work
- Your employer has certified your home office expenses on Form T2200
You are eligible to claim home office expenses if you worked from home in 2020 due to the Covid-19 Pandemic and meet all the above criteria.
The other form you must complete when claiming work-related expenses not reimbursed by your employer is the CRA Form T777 Statement of Employment Expenses. It is typically submitted along with the Form T2200. This form allows you to input all your eligible employment expenses.
To accommodate the unprecedented challenges, the CRA introduced a new simplified temporary method and a modified detailed method to claim home office expenses. For the 2020 tax year, you can choose to deduct your work-from-home expenses due to Covid-19 using either the temporary flat rate method or the detailed method.
Temporary Flat Rate Method
The Temporary Flat Rate Method is a simplified way to claim home office expenses for the 2020 tax year only.
You might use this method if you worked from home more than 50% of the time for a period of at least four consecutive weeks in 2020 due to Covid-19.
This method allows you to:
- Claim $2 per day for each day you worked from home, up to a maximum of $400
- Avoid the requirement to obtain a completed Form T2200 from your employer
- Not have to track expenses, calculate your workspace’s size, or allocate costs between employment and personal use
If more than one person in your household worked from home in 2020 due to Covid-19, each person could make a separate claim for up to $400.
This method allows you to claim the actual amounts you paid for home office expenses, supported by documents.
You might use this method if you worked from home more than 50% of the time, for a period of at least four consecutive weeks in 2020. This method may be used due to Covid-19 work-from-home requirements or as a part of your regular employment obligations.
Under the detail method, you must get a completed and signed Form T2200 or Form T2200S – from your employer.
- Form T2200S – Declaration of Conditions of Employment for Working at Home During Covid-19 is a simplified version of Form T2200. It is completed and signed by your employer if: you worked from home in 2020 due to the Pandemic and are not using the temporary flat method.
You must also complete Form T777 or Form T777S.
- Form T777S – Statement of Employment Expenses for Working at Home Due to Covid-19 is a simplified version of Form T777. You need to complete it if you are deducting actual expenses incurred by working from home in 2020 due to Covid-19 but are not claiming additional employment expenses such as motor vehicle, accounting fees, tools, and parking.
Should you opt to use the detailed method, you would need to determine your workspace’s size and use (personal and employment).
To help calculate your 2020 home office expense deduction, the CRA has created an online calculator that you can access.
What home office expenses can you claim
If you meet the eligibility criteria, you may deduct some of your home office expenses if your workspace should be either:
- Where you primarily perform your work duties from home, or
- Used exclusively for earning employment income
All salaried and commissioned employees can claim electricity, heat, water, utilities portion of your condominium fees, home internet access fees, maintenance, minor repair costs, and rent.
Office supplies and cell phone expenses are not related to your home’s physical workspace, but you can deduct these expenses.
Commissioned employees can also claim home insurance, property taxes, lease of a cell phone, computer, laptop, tablet, fax machine, etc., that reasonably relate to earning a commission income.
Salaried and commissioned employees cannot claim the following expenses:
- Mortgage interest
- Principal mortgage payments
- Home internet connection fees
- Capital expense (replacing windows, flooring, furnace, etc.)
- Wall decorations
Which Method is Best for You?
The temporary flat rate method is most suitable for you if:
- You have modest expenses, especially after pro-rating your workspace between employment and personal use
The detailed method is most suitable for you if:
- You incurred significant eligible home expenses in 2020 related to Covid-19
- Need to claim additional employment income expense such as accounting fees, tools, parking, etc.
The table below provides a summary of the two methods:
|Temporary Flat Rate Method||Detailed Method|
|Suitable for eligible employees working from home in 2020 due to the COVID-19 Pandemic||Suitable for eligible employees working from home in 2020 due to the COVID-19 Pandemic|
|You can claim $2 per each day you worked from home in 2020 due to the Covid-19 Pandemic, up to a maximum of $400||Suitable for eligible employees required to work from home|
|Your employer is not required to complete and sign Form T2200||Can claim the actual amounts you paid, supported by documents|
|Not required to keep documents to support your claim||Must have a completed and signed Form T2200S / Form T2200 from your employer|
You may claim home office expenses in your 2020 personal tax return if eligible, and your employer did not reimburse you.
The CRA provides two methods for deducting work-from-home expenses: the temporary flat rate method and the detailed method.
The temporary flat rate method is most suitable if you have minimal expenses, and the detailed method is best if you have significant expenses and other work-related expenses.
Check out our article on how taxes work in Canada as you prepare for the upcoming tax season.
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