For many Canadians, 2020 was a year full of changes we won’t soon forget. One of the most common changes most of us experienced was the sudden shift to working from home, driven primarily by the lockdown measures in response to COVID-19.
Suddenly, millions of us began using our homes as our offices — to varying degrees of success. Through all the trials and tribulations remote work inflicted upon us — including endless Zoom calls and incessant distractions — one question kept popping up: Will I be able to claim home office expenses for this upcoming tax year? And if so, how much can I claim?
Anticipating these questions, the Canada Revenue Agency (CRA) put in place special rules for 2020 when it comes to claiming home office expenses. Let’s take a look at what they are.
A simplified flat rate (H2/H3)
If you are looking for the easiest way to take advantage of the new home office tax changes for 2020, then the CRA’s temporary flat rate is certainly the way to go.
The simplified process makes it quick to know whether or not you are eligible for the deduction and removes the burden of having to calculate the size of your workspace, keep track of your expenses and their supporting documents, and get a special form filled out and signed by your employer.
In order to be eligible for the temporary flat deduction rate, you must have:
- Worked from home in 2020 due to the COVID-19 pandemic
- Worked more than 50 percent of the time from home for a period of at least four consecutive weeks in 2020
In addition to the above eligibility criteria, you may only claim home office expenses and not any other employment expenses on line 22900 of your return if you wish to use the temporary flat rate method to calculate your deduction. Nor can you use this method if your employer has reimbursed you for all of the home office expenses you incurred as a result of having to work from home.
I meet the eligibility requirements; how much can I claim?
Under the CRA’s temporary flat rate method, you can claim $2 for each day you worked at home in 2020, up to a maximum of $400. This goes for anyone in your household, so if you and your partner both found yourself working from home during the pandemic, you can each claim up to $400. So long as you both satisfy the two key eligibility requirements listed above.
Claiming the temporary flat rate deduction has been made extremely easy by the CRA. All you have to do is fill out form T777S and attach it to your tax return.
A simplified detailed method for claiming home office expenses
If you would rather claim the actual amounts you paid as a result of working from home due to COVID-19, and are prepared to support your claims with documents, then the detailed method may be the route for you.
The CRA has created a simplified T2200S form that must be filled out and signed by your employer if you wish to use this method. It has also simplified the T777S form that you must fill out and attach to your tax return too.
For a full list of what expenses can and cannot be claimed using the detailed method, click here to visit the CRA’s comprehensive guide.
We’re always here to help with your business!
Whether you choose to use the flat rate or detailed method when claiming your home office expenses this year, Censea is always here to help with your financial success.
Contact us today so we can make sure you are taking full advantage of all the deductions and tax strategies available to you and your business. Because no one wants to overpay the CRA!