The way we work is changing, and for millions of Canadians it may be permanent. In March 2020, the COVID-19 pandemic and provincial lockdowns meant millions of Canadians were forced to work from home.
Holed up at home to work, Canadians have turned their kitchens, bedrooms, and basements into offices, and spent more money than usual on utilities and office supplies. Thanks to daily Zoom calls and Microsoft Teams meetings many had to upgrade their Internet plans too.
Canadians working from home before the coronavirus pandemic were already entitled to certain work-related deductions. For those that are new to working from home, the tax laws and rules can be confusing and complicated.
Before COVID-19, Canadians who worked from home had to submit Form T2200, Declaration of Conditions of Employment. It’s a form that’s filled out by your employer and allows you to claim expenses you incur to do your job.
Because of COVID-19 and the huge number of Canadians forced to work from home, many Canadians may not even need a T2200 form when it comes time to do their annual taxes. The big question is, what kind of work-from-home tax deductions can you claim that were a result of the pandemic?
Requirements to Qualify for Work-from-Home Tax Deductions
Officially, it’s called the “work-space-in-the-home” deduction. Under the current rules from the Canada Revenue Agency (CRA), you can only claim expenses that will not be reimbursed by your employer. And the expenses must be related directly to your work.
According to the CRA, you can deduct any expenses you paid in 2020 for a workspace in your home if you meet one of the following conditions:
- The workspace is where you did the majority (more than 50%) of your work. If you were sent home to work in March, by September, you will have spent half the year working from home.
- The workspace is used exclusively for work. You also have to use it on a regular and continuous basis for meeting customers, clients, or other people related to your employment.
Again, given that the government mandated shutdown forced many Canadians to work out of makeshift offices in their kitchen or bedroom, the federal government may loosen this requirement.
Claiming workspace expenses can really add up, which can significantly reduce your taxable income. In 2018, 174,210 Canadians took advantage of the work-space-in-the-home deduction in 2018, claiming on average $1,561 per person.
Documents Required for Filing Work-from-Home Tax Deductions
Some of the important forms and publications you should be familiar with include:
- Form T2200, which certifies an employee had to incur expenses while doing their job
- Form T777, Statement of Employment Expenses is meant for certain commission employees, certain salaried employees, and certain employees who work remotely or on the road. It contains a long list of deductible expenses.
- IT352, Employee’s Expenses, including work-space-in-the-home expenses.
Claims That Are Eligible for Work-from Home Tax Deductions
There are a large number of expenses you can claim if you work from home. In fact, home office expenses are the most common tax-write off. How much you can claim is determined by the percentage of your home office space compared to the total size of your home.
If you work from home, you can write-off:
- Office expenses (pens, paper, stamps)
- Electricity, heat, and water
- Repairs, maintenance, and cleaning supplies
- Home insurance (only if you work commission)
- Accounting and legal fees
- Advertising and promotion
- Work-related entertainment
Claims That Are Not Eligible for Work-from-Home Tax Deductions
Masks and Other COVID-19 Expenses
It might be mandated in your region that you must wear a mask in public spaces, but unfortunately, you cannot deduct masks. Unless, of course, you work in a field that requires it. The same goes for hand sanitizer or other related products.
While you can claim certain deductions for working from home, you don’t get to claim anything that made it more comfortable. Office chairs, a new desk, or monitor are considered capital expenses that do not qualify.
You can deduct the cost of supplies, however, if you meet all of the following criteria:
- Your employer said you had to provide and pay for office supplies
- You used the supplies directly in your work.
- Your employer has not and will not repay you for these expenses.
Even though you might have upgraded your Internet to ensure your Zoom meetings stream properly, you cannot deduct the monthly service fee. Even if your employer fills out a T2200.
You cannot claim your property taxes unless you work on commission. Even then, you can only deduct a reasonable amount from the total costs with your T2200.
In light of everything, this may be a little confusing, but the CRA allows employers to reimburse employees up to $500 in allowable expenses without taxing that amount. That includes office furniture, other home office items, and computers. But the reimbursement can only be used if the expenses were related to the COVID-19 pandemic.
The federal government also announced that Canadians who work at home can claim $400 in home expenses on their 2020 income tax return. Instead of adding up all your expenses and dividing it by the number of square feet and how long you’ve been working from home, Ottawa will let you just deduct $400.
Easily File Your Taxes Online with FastnEasyTax.com
If you work from home as a result of the coronavirus pandemic and want to use free income tax software to file your taxes online, the personal income tax experts at FastnEasyTax.com can help.
Certified by the CRA, we offer a variety of different products: a web application that allows you to submit your tax return online, without the need to download any software and a mobile app (eFile Canadian Tax Return) for all mobile platforms (Android, Apple, and Windows).
Our tax programs are easy to understand, the platforms are easy to use, and our customers get their tax refund back within 10 days. If you’re having difficulties, reach out to use, we’re happy to help our customers in any way possible.