The home office has never been more popular! Over the past two years we’ve gotten very familiar with the short commute to our desks and working from home can be extremely productive. It can also help you save on your income tax return.

Whether you’re a sole proprietor or an employee, here’s your first step.

Calculate the square footage of the space you use for business within your home – be truthful. If you take up half the kitchen, measure that space. If it’s an entire room, or basement, or floor, measure that space.

Next, apply the total square footage of the house, including all finished areas (including hallways, bathrooms, kitchen).

The size of your work space divided by the size of your home times 100 gives you the percentage you can claim.

Use this to determine the percentage you can apply against these expenses:

  • electricity
  • heat
  • water
  • utilities portion (electricity, heat, and water) of your condominium fees
  • maintenance and minor repair costs
  • rent paid for a house or apartment where you live

Commission employees and sole proprietors can also claim

  • home insurance
  • property taxes
  • internet access fees

Note that if you are a salaried or commission employee you cannot claim:

  • mortgage interest
  • principal mortgage payments
  • home internet connection fees
  • furniture
  • capital expenses (replacing windows, flooring, furnace, etc)

Sole proprietors can claim the above deductibles if they are used for business.

If you are a commission salesperson, are required to work from home by your employer, and/or incur expenses that you do not submit to your employer for reimbursement, ask your employer to fill out the T2200.

This will allow you to claim those expenses on your personal income tax.

For the 2020 year the CRA issued the T7777S, a statement of employment expenses for working at home due to the pandemic, providing a flat rate method for reimbursing employees who were forced to work from home. It’s unknown yet if that form will apply for 2021.

The CRA provides a detailed breakdown of exactly what expenses are allowable, but it is exhaustive – and therefore can be exhausting. We can take the stress off your hands, providing easy, streamlined support for your annual tax returns. Contact us when it’s time to file and we will help you get the maximum refund with the least amount of hassle.

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