Here is all what you need to know about the simplified process for claiming the home office expenses for Canadians working from home due to the COVID-19 pandemic.
The Honourable Diane Lebouthillier, Minister of National Revenue, provided more details yesterday on how the Canada Revenue Agency has made the home office expenses deduction available to more Canadians, and simplified the way employees can claim these expenses on their personal income tax return for the 2020 tax year.
Employees who worked from home more than 50% of the time over a period of a least four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim the home office expenses deduction for 2020. 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.
A new temporary flat rate method will allow eligible employees to claim a deduction of $2 for each day they worked at home in that period, plus any other days they worked from home in 2020 due to COVID-19 up to a maximum of $400. Under this new method, employees will not have to get Form T2200 or Form T2200S completed and signed by their employer.
To simplify the process for employees choosing the detailed method, the CRA launched today simplified forms (Form T2200S and Form T777S) and a calculator designed specifically to assist with the calculation of eligible home office expenses.
Here are the most important info you’d need to know before deciding whether to use the simplified way or the old way.
Under this method you do not have to calculate the size of your work space or keep supporting documents. Instead, you claim a temporary flat rate of $2 for each day you worked from home in 2020 due to the COVID-19 pandemic (up to a maximum of $400). This option is only available for the 2020 tax year due to the COVID-19 pandemic.
This method simplifies your claim for home office expenses (work-space-in-the-home expenses and office supply and phone expenses). 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. You can then also claim any additional days you worked at home in 2020 due to the COVID-19 pandemic. The maximum amount that can be claimed is $400 per individual. This method can only be used for the 2020 tax year.
Days that can be counted:
- days you worked part-time hours from home
days you worked full-time hours from home
Days that cannot be counted:
- days off
- vacation days
- sick leave days
- other leave or absence
For you, you do not have to calculate the size of your work space or to keep supporting documents. On the other hand, your employer does not have to complete and sign Form T2200S or Form T2200.
Each employee working from home who meets the eligibility criteria can use the temporary flat rate method to calculate their deduction for home office expenses. To use this method to claim the home office expenses you paid, you must meet all of the following conditions:
- You worked from home in 2020 due to the COVID-19 pandemic.
- You worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020.
- You are only claiming home office expenses and are not claiming any other employment expenses.
- Your employer did not reimburse you for all of your home office expenses.
– What if your employer has reimbursed you for some of your home office expenses? You can still use the temporary flat rate method, if you meet the eligibility criteria.
– What if you chose to work from home? If you were not 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.
How to claim your home office expenses using the simplified method?
After confirming your eligibility, you can fill out the new form by starting with counting the total number of days you worked from home in 2020 due to the COVID-19 pandemic and multiply that by $2 per day. This amount will be your claim for 2020 (up to a maximum of $400 per individual).
# of days you worked from home within the period (maximum 200) X $2 = Amount of your claim ((to a maximum of $400).
It’s very important to only use the working days to calculate the # of days worked and to deduct the following:
- Statutory Holidays.
- Sick days
Then you can fill out the Form T777S – Statement of Employment Expenses for Working at Home Due to COVID-19 by entering these amounts and attach it to your 2020 income tax return.
We at JA Accounting can help you determine which of the two methods is more beneficial for you.
Ask us how in the comments or contact us for more info.