Lots of my clients and friends who worked from home due to COVID-19 have recently been question like, if they are eligible to claim home office expenses? Should they use the flat rate method or detailed method? and for detailed method should they use form T2200 or T2200S?

The home office expenses can provide a decent deduction from your income you pay tax on, thus reducing the overall income tax cost.

Following are the quick facts that will help you answer these questions and maximize your tax savings.

Who can claim home office expenses

Please note that if you were not originally required to work from home, but your employer provided you with the choice to work at home because of the COVID-19 pandemic, then the CRA will consider you to have worked from home due to COVID-19, as far as you meet the following criteria:

  • You were required to pay for expenses related to the work space in your home.
  • Your work space is where you mainly (more than 50% of the time) work for a period of at least four consecutive weeks. Or you regularly and continually use your work space exclusively to earn employment income.
  • Your expenses are used directly in your work.
  • You have a completed Form T2200 or T2200S, and get it signed by your employer

Which method to use

To help reduce the work and to keep the process simple for both you and your employer, CRA has introduced a temporary simplified method where you can claim flat $2 for each day that you worked at home during that period, plus any other days you worked at home in 2020 due to COVID-19, up to a maximum of $400 for the year, as far as you meet the above eligibility criteria except for the last one.

This method is more effective, if your employer is reimbursing you for some of the expenses. As it allows for you to still benefit from $2 a day deduction. Plus, you don’t have maintain supporting documents like receipts and invoices for home office expenses.

For detailed method you can not claim any expenses that were or will be reimbursed by your employer. following table lays out the expenses you can generally claim :

All salaried employees and commission employees can claim
Commission employees can also claim
  • Electricity
  • home insurance
  • heat
  • property taxes
  • water
  • lease of a cell phone, computer, laptop,
  • utilities portion (electricity, heat, and water) of your condominium fees
tablet, fax machine, etc. that reasonably relate to earning commission income
  • home internet access fees
  • maintenance and minor repair costs
  • rent paid for a house or apartment where you live
Salaried employees and commission employees cannot claim
  • mortgage interest
  • principal mortgage payments
  • home internet connection fees
  • furniture
  • capital expenses (replacing windows, flooring, furnace, etc.)
  • wall decorations

The answer is simple, if you are willing to keep proper records majority of the time the detailed method will lead to higher deduction consequently higher tax savings.

T2200 or T2200S

If your life has changed due to COVID 19 and you only worked from home due to the pandemic, it is better to use T2200S as it is a shorter version of Form T2200. Irrespective of which one you use either of these forms id to be kept by you and not included with your tax return.

For your 2020 income tax return you will need to use Form T777 to calculate and claim the allowable employment expenses. Form T777 must be filed with your tax return.

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