Claiming Working from Home Expenses
By Wendy Wong, CPA, CA, Senior Manager, Tax & Advisory Services
For your 2020 personal tax filing, the Canada Revenue Agency has introduced two options that will allow employees to report expenses they incurred while working from home during the pandemic.
All eligible members of a household who worked from home can each claim working from home deduction using either method.
Flat Rate Method
The first, and most straight-forward way to claim your working from home expenses, is to use the ‘temporary flat rate method’. This method allows you to claim $2 for each day you worked from home during 2020, up to a maximum of $400. To be eligible for the flat rate method, you must have worked from home more than 50% of the time for a period of at least four consecutive weeks due to COVID-19.
If you have been working from home since mid-March it may be tempting to claim the maximum 200 days. But be careful; sick days, vacation days, statutory holidays or any other leaves of absence do not count as eligible work days and should not be included when tallying up the numbers of days you worked from home.
If you use the flat rate method you cannot claim any other additional home office expenses. The advantage is you do not need a lot of supporting documentation, you only have to keep track your eligible work days.
If your eligible home office expenses are greater than $400 you can opt to claim the costs using CRA’s ‘detailed method’.
The detailed method allows you to claim office supplies, phone service plans and work-related long distance phone charges, and a portion of many of your household bills, based on the percentage of space of your home that is used for your office. The CRA website offers guidance on how to calculate the percentage of your home being used for your home office.
A portion of your household expenses that can be claimed as an office expense include:
- Home internet
- Maintenance and minor repairs
- Rent paid for your home
Commission employees can also claim:
- Home insurance
- Property taxes
- Lease of cell phones and laptops that reasonably relate to earning commission income.
If your employer reimbursed you for any of these expenses, you cannot claim them on your tax return.
You cannot claim:
- Mortgage interest and principal payments
- Internet connection fees
- Capital expenses such as new windows, flooring or a furnace
If you choose to use the detailed method to claim your home office expenses, you will need to obtain from your employer Form T2200S or T2200 and you will need to complete Form T777S or T777 in your T1 personal income tax return.
The detail method requires you to track all eligible expenses, retain documentation and original receipts (credit card receipts are not accepted) for three years.
More information on both the flat rate and detailed method can be found on the CRA website.