Simplifying the process for claiming a deduction for home office expenses for employees working from home due to COVID-19

Source: 
Canada Revenue Agency

From: Canada Revenue Agency

Backgrounder

As a result of the unprecedented challenges due to COVID-19, many people have been working at home and using their kitchens, bedrooms and living rooms as their work space. In response, the Canada Revenue Agency (CRA) has introduced a new temporary flat rate method to simplify claiming the deduction for home office expenses for the 2020 tax year.

As an employee, you may be able to claim a deduction for home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses). This deduction is claimed on your personal income tax return. Deductions reduce the amount of income you pay tax on, so they reduce your overall income tax liability.

Eligibility

You are eligible to claim a deduction for home office expenses for the period you worked from home, if you meet all of the criteria:

  • you worked from home in 2020 due to the COVID-19 pandemic or your employer required you to work from home
  • you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020
  • have a completed and signed Form T2200S or Form T2200 from your employer (only applicable if the detailed method is used to complete the claim)
  • the expenses are used directly in your work during the period

The use of a shorter qualifying period will ensure that more employees can claim the deduction than would otherwise have been possible under longstanding practice.

New temporary flat rate method

The new temporary flat rate method simplifies your claim for home office expenses. You are eligible to use this new method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020 due to the COVID-19 pandemic. You can claim $2 for each day you worked from home during that period plus any additional days you worked at home in 2020 due to the COVID-19 pandemic. The maximum you can claim using the new temporary flat rate method is $400 (200 working days) per individual.

Each individual working from home who meets the eligibility criteria can use the temporary flat rate method to calculate their deduction for home office expenses. This means multiple people working from the same home can each make a claim.

This method can only be used for the 2020 tax year.

Simplified process for the temporary flat rate method

You do not have to: calculate the size of your work space, keep supporting documents or get Form T2200 completed and signed by your employer.

What counts as a work day

  • days you worked full-time hours from home
  • days you worked part-time hours from home

What days do not count

  • days off
  • vacation days
  • sick leave days
  • other leave or absence

Expenses that are covered by the $2 a day flat rate

The temporary flat rate method is used to claim home office expenses. You cannot claim any other employment expenses (line 22900) if you are using the flat rate method.

Using the detailed method to claim your deduction for home office expenses

You can use the detailed method to claim the home office expenses you paid for the period that you worked from home.

Simplified process for using the detailed method if you worked from home due to the COVID-19 pandemic

To support you, the CRA:

  • created a simplified Form T2200S and Form T777S
  • created a calculator to help you claim the home office expense deduction that you are entitled to
  • will accept an electronic signature on the Form T2200S and Form T2200 to reduce the necessity for employees and employers to meet in person (applies to the 2020 tax year only)

What is Form T2200S?

Form T2200S, Declaration of Conditions of Employment for Working at Home During COVID-19 is a shorter version of Form T2200 that you get your employer to complete and sign if you worked from home in 2020 due to the COVID-19 pandemic and are not using the temporary flat rate method. Your employer completes and signs this form to certify that you worked from home in 2020 due to COVID-19 and had to pay your own home office expenses.

What is Form T777S?

Form T777S, Statement of Employment Expenses for Working at Home Due to COVID-19,  is used to calculate your claim for home office expenses.

How to determine the employment use of a work space

Whether you work at the dining table or in a spare bedroom, there are several factors to consider when calculating your employment use of the work space:

New eligible expenses

The CRA has expanded the list of eligible expenses that can be claimed to include home internet access fees.

comprehensive listof eligible home office expenses has also been created.

For more information on working from home expenses go to Canada.ca/cra-home-workspace-expenses.