Due to the COVID-19 pandemic, millions of Canadians have had to unexpectedly transition from out of the office to working from home in 2020. This has left many employees wondering whether or not they’ll now be able to deduct their home office expenses on their personal income tax return. To support these working Canadians during the pandemic, the Canadian Revenue Agency (CRA) has introduced a new temporary flat rate method to simplify the process for claiming deductions for home office expenses for the 2020 tax year.
To help you determine if you may be eligible to receive a deduction on your 2020 income tax, here is a breakdown of everything you need to know about the new rules and eligible home office expenses deductions:
Am I eligible to claim my home office expenses?
You are eligible to claim a deduction for home office expenses on your personal income tax return if you meet all the following criteria:
- You worked from home in 2020 due to the COVID-19 pandemic or your employer required you to work from home.
- You worked more than 50% of the time at home for at least 4 consecutive weeks in 2020
- You have completed and signed Form T2200S or Form T2200 from your employer (only applicable if the detailed method is used to complete the claim)
- The expenses are used directly in your work during the period
New temporary flat rate method:
Employees that meet the eligibility criteria may opt for the new simplified temporary flat rate method to claim home office expenses and may claim $2 for each day they worked from home during the period, plus any additional days they worked at home in 2020 due to COVID-19. The maximum amount you can claim using the new temporary flat rate method is $400. More than one person at the same address can claim the deduction as long as each one qualifies for it. This method can only be used for the 2020 tax year.
With the temporary flat rate method, you do not have to calculate the size of your work space, keep supporting documents, or have Form T2200 completed and signed by your employer.
Using the detailed method:
You can also use the detailed method to claim the home office expenses you paid for the period that you worked from home. If you are using the detailed method to claim your deduction for home office expenses, the CRA has done the following to help simply the process:
- created a simplified Form T2200S and Form T777S
- created a calculator to help you calculate and claim the home office expenses you are entitled to.
- will accept an electronic signature on the Form T2200S and Form T2200
What is Form T2200S?
Form T2200S is a shorter version of Form T2200, which is the form you get your employer to complete and sign if you worked from home in 2020 due to COVID-19 and are not using the temporary flat rate method. Your employer completes and signs this form to certify that you worked from home in 2020 due to the COVID-19 pandemic and had to pay your own home office expenses.
What is Form T777S?
Form T777S is used to calculate your claim for home office expenses.
How do I calculate my employment use of a work space?
- If you are using the detailed method, you will need to determine the size and use of your work space to calculate your claim for work-space-in-the-home expenses.
- You will need to determine the type of work spaces you utilized.
- You will need to determine the hours per week you use the space for work.
What are all the eligible expenses that can be claimed?
Cross & Co. has years of experience providing income tax services to businesses and individuals across Vancouver Island. With the help of our expert Nanaimo accountants, you can make sure that deductions are missed in your home office expenses. To book an appointment with our Nanaimo accountants, contact us today.