The year 2020 has been a strange one for everyone. In these unprecedented times, many of us have shifted to working from home, and purchasing items such as desks, chairs, and monitors. So can you write off these expenses incurred because of COVID-19 on your taxes?
Previously, home office expenses were only able to be deducted if an employee was:
- a) contractually obligated to maintain a home office, and were not otherwise reimbursed by their employer; and
- b) either:
- the employee principally performed their employment duties at their home office; or
- the home office space was used exclusively during the period for the purposes of earning employment income on a regular and continuous basis, and for meeting customers or other persons in the ordinary course of performing employment duties.
In December 2020, the CRA announced that even if you were not required to work from home, but your employer provided you with the choice to work at home because of COVID-19, then CRA will consider you to have been “required to work from home” for purposes of claiming home office expenses for 2020.
There are two methods to claim home office expenses for 2020: the temporary flat-rate method, and the detailed method. Both methods can only be used if you have worked more than 50 per cent of the time from home for a period of at least four consecutive weeks in 2020 due to COVID-19.
Under the temporary flat-rate method, you would claim $2 for each day you worked from home, up to a maximum of $400, per individual. This means that if there is more than one family member working from home, each family member can make a separate claim for up to $400. Using this method you do not have to track or keep supporting documents to track your expenses, and you do not need a signed T2200S form from your employer.
Under the detailed method, you must have a completed and signed Form T2200S (or Form T2200) from your employer. You are able to write off a variety of expenses using this method, for example, the cost of rent, electricity, home internet, water, maintenance, etc. Employees cannot deduct mortgage interest nor capital expenses or depreciation. Expenses are to be allocated between personal and work elements on a “reasonable basis” For more information, the CRA has created a page explaining the changes and including an online calculator where you can calculate your home office expenses.
This article is a general discussion of certain tax and accounting matters and should not be relied upon as tax or accounting advice. If you require tax or accounting advice, we would be pleased to discuss the issues in this article with you.
