Work from Home

Work From Home Expenses 

Do you like working from home specially when it can save your tax dollars. Working from home may be convenient for some and can provide a memorable experience. It provides a great amount of flexibility and save time for commute. It can give extra hours to some to utilize and be close with their near family members. Some may like working from home as it gives more distraction and can cause lack of focus problem.  Working form home can be rewarding in terms of saving taxes. 

There are two methods for determining tax deduction for work from home expenses i.e. Simplified method and Detailed method. During Covid time, CRA has introduced a simplified method. Under simplified method, taxpayers were allowed to claim a $2 per day subject to maximum of 250 days for working from home. However, CRA has discontinued this simplified method starting from tax year 2023. There is no change in detailed method. Employer has to provide a T2200 form in order to make them eligible to get deduction from

How Detailed method is different than simplified method. 

Under simplified method, taxpayer does not need to spend time totaling utilities or measure the area of your work space, rather taxpayer was allowed a flat rate subject to maximum of $500 per year. On the other hand, under detailed method, taxpayer is allowed to claim proportionate amount of utilities, rent or other eligible expenses. More details of what kind of expenses can be claimed is discussed below.  Taxpayer can submit the employment expenses using form T777S for years 2020, 2021 and 2022, however under detailed method, taxpayer needed to complete T777 in their tax return. 

Eligibility Criteria

You can claim the expenses spent for work space of home but you needed to meet the following conditions:

- Taxpayer needed to obtain a Form T2200 from the employer 

- Your employer required you to work from home. CRA requires that requirement does not have to be part of your employment contract, but there should be a written or verbal agreement. 

- You were required to pay for expenses related to work space in your house. When your employer reimburses the amount, then you can not claim the amount for work from home. 

- You work for at least four consecutive weeks in the year and you work more than 50% of the time from your home. Alternatively, you use the space on regular and continues basis for in-person meetings with your clients, your customers, or other people while doing your work. 

- Your expenses are directly required for your work 

What if Your Employer Reimburses You? 

If the employer has reimbursed the expenses then you are not allowed to claim the expenses. 

What kind of expenses can be claimed? 

- All salaries employees and commission employees can claim 

o Electricity, heat, water 

o If condo fees include utilities, then portion of condo fee  

o internet access fees for home

o Maintenance and minor repair costs 

o Rent paid for your place

What expenses cannot be claimed 

  Remember you cannot claim the following expenses 

- Mortgage interest

- Principal portion of your mortgage payments 

- Home internet commission fees 

- Furniture and fixtures 

- Any capital expenditures 

- Any decorations cost 

If your employer requires that you pay for supplies or certain phone expenses, then you are allowed to claim those expenses. Remember to have a copy of T2200 in place when you file your taxes. 

Given the complexities involved, seeking advice from a tax professional is advisable to navigate the nuances of claiming work from home expenses effectively.