2020 has seen a dramatic increase in the number of Canadians working from home in response to the ongoing pandemic. A wide variety of workplaces have had to close for extended periods to comply with public health restrictions due to COVID-19 or have asked their employees to work from home out of caution. Millions of Canadians have found themselves unexpectedly having to find or make space in their homes to accommodate working remotely.
Employees who meet certain criteria are entitled to claim the expenses associated with a home office on their taxes. With such a dramatic increase in the number of people working remotely this year, many people will be claiming these expenses for the first time. The Canada Revenue Agency (CRA) has recognized this situation and has implemented some temporary changes to how home office expenses are claimed for 2020. The new changes announced by the CRA on December 15, 2020, will make these deductions available to more Canadians and will help to simplify the process, both for the employees and their employers.
As so many people have had to find or make space where they can to work from home, the definition of a home office has loosened up considerably. Employees who worked from home more than 50% of the time for a period of at least four consecutive weeks due to COVID-19 in 2020 will be eligible to claim a deduction on their 2020 income taxes for home office expenses. Two methods of claiming these deductions are available; a temporary flat rate method or a detailed method of claiming all of the expenses you paid while working from home.
The simplest of these methods is the option to claim a flat rate of $2 per day to a maximum of $400 for the year. Employees who choose this route will not have to keep any receipts or have any paperwork signed by their employer. This option would work the best for people who would be strictly claiming for home office expenses. This method does not apply to those who need to claim added expenses such as automotive or travel expenses. In reviewing home office expense deductions for previous years, the CRA found that most of these approximated the $400 limit for this option. If someone believes that they are entitled to a larger deduction, they can still use the detailed method.
A completed T2200 or T2200S form from your employer is required to be able to use the detailed method. The T2200 form certifies the conditions of employment and whether you were required to pay for employment expenses. The T2200S is a simplified version of the T2200 form to be used specifically if you worked from home due to the COVID-19 pandemic and wish to use the detailed method to calculate your home office expenses. In filling out this form, your employer certifies that you worked from home in 2020 due to the COVID-19 pandemic and that you had to pay for some or all of the home office expenses used directly for your work while carrying out the duties of your employment.
The CRA has also created an online calculator to help determine the home office's square footage and the expenses to be claimed for the detailed method and has expanded the list of expenses eligible for deductions. This expanded list now includes internet access fees, which will be treated as a utility (such as electricity or natural gas). You will need to keep the supporting documents for the items that you claim with the detailed method.
More information is available at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-229-other-employment-expenses/work-space-home-expenses.html
Dean LaBerge, Local Journalism Initiative Reporter, Grizzly Gazette