Were you forced to work from home in 2020 due to the Covid-19 pandemic? If so, you were among the millions of Canadians that were obliged to abandon the relative convenience of their offices and convert their spare bedrooms, living rooms and kitchen tables to workspaces. The good news is that the Canada Revenue Agency (CRA), in recognition of this new reality, has made the home office expenses deduction available to more Canadians, and simplified the way employees can claim these expenses on their personal income tax return for the 2020 tax year.
Here are the key measures:
You can generally claim a home office expense deduction if you worked from home in 2020 due to the COVID-19 pandemic more than 50 per cent of the time for a period of at least four consecutive weeks in 2020.
If you qualify, you can do a detailed calculation or instead use a temporary flat rate method. If you use the flat rate method then no T2200 is needed. If you are not familiar with this form, the T2200 is the form your employer completes to certify your eligibility for certain deductions you can claim against your employment income. Your employer fills in information about duties required, expenses, travel, commissions and if you were required to work from home for any amount of time. If you do a detailed calculation, you will have to obtain a regular T2200 form or a shortened pandemic version of the form (Form T2200S) from your employer.
Under the flat rate method, you can claim $2 per day for each day worked at home up to a maximum of $400 (i.e. 200 days).
The CRA has also announced that internet access costs are eligible, but only if the detailed calculation approach is used.
Fortunately, the T2200S is much shorter than the simplified version that the CRA previously required. An employer will only have to confirm whether the individual worked at home due to the pandemic, whether they were reimbursed for home office costs and whether those costs are reported on the employee’s T4.
Of course, the flat rate method is not a panacea for declaring home office expenses. For example, under existing rules renters are generally able to claim a higher amount than homeowners, i.e. more than $2 per day. In addition, it is likely that many employees will be better off using the detailed method, for example, those who worked at home for more than 200 days.
Keep in mind, however, that the usual approach will generally apply for those employees who had pre-existing work at home arrangements.
Do you live in Quebec?
Similar provisions exist for Quebec taxpayers regarding provincial taxes owing. If you are an employee who teleworked in 2020 because of COVID-19, you can either use the temporary fixed rate method or the detailed method to claim a deduction for employment expenses.
The temporary fixed rate method lets you deduct $2 from your income for each day you teleworked at home (do not take into account holidays, sick days and vacation) up to a maximum of $400 for the year.
If you use the temporary fixed rate method, complete only Parts 1 and 2 of form TP-59.S-V, Expenses Related to Working Remotely Because of the COVID-19 Pandemic, and enclose it with your income tax return. Your employer does not have to complete form TP-64.3-V, General Employment Conditions, for you, and you do not have to keep supporting documents.
If you use the detailed method, enclose the following forms with your income tax return:
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