Millions of Canadians transitioned to working from home in 2020. Here’s a summary of what home office expenses you are eligible for on your tax return.

Did you find yourself picking up office supplies for your makeshift home office? Or did you have to use your cellphone to make and receive official calls? Well, you are eligible to deduct most home office expenses on your personal 2020 tax return. These deductions can help you offset the costs.

Incredibly, you do not have to worry about the daunting and tedious task of completing the necessary paperwork or doing many calculations. The Canada Revenue Agency (CRA) came up with an easier way to do it. Additionally, you no longer have to keep stacks of receipts or calculate the size of your makeshift home office for this deduction. If you are an employer, there’s also no need to provide dozens of T2200 tax forms for your employees.

Here is a summary of all you need to know before deducting your home office expenses on your tax return:

The CRA calculator

The CRA launched a calculator that you and your employees can use to calculate the cost of expenses you can claim. It’s a simplified way of doing it. Click on this link to access the calculator.

Claim up to $400 in-home office expenses

There is a newly simplified method to claim your expenses called the temporary flat method. With it, you can claim up to $400 in the 2020 tax year, which works out to a deduction of $2 for every remote workday for 200 working days. It doesn’t include sick leave days or days off, but every other hour you spent working from home.

Additionally, there are several requirements you have to meet to use this method. It includes:

  • You worked from home because of Covid-19.
  • Your employer did not reimburse you fully for your home office expenses.
  • You are only claiming home office expenses.

However, if you are a salaried or a commissioned employee, you can still use the existing detailed method to claim an even larger deduction. That includes home internet access fees, rent for your apartment or house, property taxes, lease of your tax machine, cell phone or laptop, and home insurance, among others. Even so, whichever method you choose to use to claim deductions is all right.

A simplified T2200 tax form

The new T2200S forms are simpler to complete. As an employer, all you need to do is confirm a couple of details, including:

  • Were your employees working from home because of the pandemic?
  • Did you reimburse any of their home office expenses?
  • Did you include the reimbursement amount on their T4 slip?

Anyone working remotely due to the pandemic can use this new form to seek a deduction of home office expenses and office supplies. Besides, employers can use electronic signatures on the T2200 and T2200S forms for the 2020 tax year. If your employees choose the new temporary flat method to claim deductions, you won’t need to complete the form. However, employees can only use this form for claiming home office expenses. They cannot use it for claiming other employment deductions like motor vehicle expenses.

Need help? Contact us.

If you’re looking for an experienced accounting partner who will help take your business to the next level, contact us for more information.

Do you have more tax-related questions about your small business? Visit our Small Business Tax Planning Centre!

You already voted!