Working from home quickly became the norm for many in 2020. In fact, many employees have continued to work remotely well into 2022 (and beyond). This change in lifestyle has required a lot of people to absorb the cost of doing business at home such as increased power and internet data usage, as well as the need for a dedicated workspace. Fortunately, the Canada Revenue Agency has made it possible to claim many of these additional expenses at tax time.
There are two ways you can claim your home office expenses: the temporary flat rate method and the detailed method. The eligibility requirements differ for each, so you’ll need to decide which one is the most appropriate for your situation.
Option #1: Temporary Flat Rate Method
The temporary flat rate method applies to eligible employees who worked from home in 2020, 2021, or 2022 due to the COVID-19 pandemic.
This method allows you to claim $2 for each day spent working from home, up to a maximum of $400 in 2020, and $500 in 2021 and 2022. You are not required to keep any documentation to support your claim, and your employer doesn’t need to complete and sign a T2200 form.
If the temporary flat rate method sounds ideal to you, then double-check to ensure that you meet all of the following conditions:
- In 2020, 2021 or 2022, you worked from home during the COVID-19 pandemic, either by necessity or by choice.
- You worked from home over 50% of the time for a period of at least four consecutive weeks. This can include alternating between working from home and the office, as well as working part-time from home.
- You are only claiming home office expenses and no other employment expenses on line 22900.
- Your employer did not reimburse you for some or all of your home office expenses.
Option #2: Detailed Method
If your job requires you to work from home, or the daily $2 limit on the temporary flat rate method feels inadequate, then you will want to use the detailed method. This method allows you to claim the actual amount you paid on home workspace expenses.
To claim your exact expenses, you must meet all of the following conditions:
One of the following applies:
- In 2020, 2021 or 2022, you worked from home during the COVID-19 pandemic, either by necessity or by choice.
- Your employer requires you to work from home.
One of the following applies:
- You spent more than 50% of your time in your workspace for a period of at least four consecutive weeks in the year.
- You only use your workspace to earn employment income.
One of the following applies:
- You have a completed and signed a copy of Form T2200S, Declaration of Conditions of Employment for Working at Home Due to COVID-19, from your employer.
- You have a completed and signed copy of Form T2200, Declaration of Conditions of Employment, from your employer.
You were required to pay for home workspace expenses and your employer did not reimburse you for some or all of them. (Obviously you cannot claim anything that your employer will reimburse you for.)
Your expenses directly relate to your work.
Eligible Home Workspace Expenses
When you work from home, the lines can sometimes blur a little regarding what you can claim, what you can’t, and what percentage of the total makes sense.
To make matters even more confusing, commission employees (or those who typically have an income amount listed in box 42 on their T4 slip) are eligible to claim additional expenses that salaried employees cannot.
What Can You Claim?
Salaried and commissioned employees can both claim…
-
- Electricity
- Heat
- Water
- Utilities portion (electricity, heat, and water) of your condominium fees. (See how to determine these expenses.)
- Home internet fees (excluding connection or modem lease fees)
- Maintenance and minor repair costs that relate to your workspace, only
- Rent paid for where you live (Note, if you own your home, you cannot claim the rental value of that workspace.)
Commission employees may also claim…
- Home insurance
- Property taxes
- Lease of a cell phone, computer, or any equipment that relates to earning a commission income
What You Cannot Claim
Salaried and commission employees cannot claim…
- Mortgage interest
- Principal mortgage payments
- Home internet connection fees
- Furniture
- Capital expenses such as new flooring, window upgrades, etc.
- Décor or wall hangings
Claiming Office Supplies and Phone Expenses
Sometimes your employer may require you to cover the cost of your own office supplies or phone expenses. Of course you can claim these items, but because they are not related to your physical workspace, they need to be claimed separately on Form T777S or Form T777.
Nearly 60 items are identified in the CRA’s office supplies search database, but only a fraction of these are claimable. To simplify your search, we’ve listed everything you can claim below.
Both salaried and commissioned employees can claim envelopes, folders, highlighters, ink cartridges, notebooks, paper clips and binder clips, pencils and pens, printer paper, specialty paper, stamps and postage, stationary items, sticky notes, and toner.
Commissioned employees may also claim their computer, laptop or tablet lease, and fax machines.
Cell phone expenses may be claimed by both salaried and commissioned employees as long as the plan is reasonable, accurately proportioned between employment and personal use, and you are able to show the minutes or data consumed while performing employment duties.
A Few Restrictions to Note …
Before you begin calculating what you can claim for your home office expenses, there are a few important limitations you need to be mindful of.
- If you only worked for part of the year in your home, then you can only claim for the part of the year that you worked from home.
- You can only claim home workspace expenses that relate to that specific source of income you are employed for, and not from any other income.
- If your expenses exceed your income to create a loss, then you can carry those expenses forward to the following tax year, so long as you are reporting income from the same employer. However, if you are a commission employee, then you might not be able to claim your total home workspace expenses if they exceed your commission income. Visit the CRA to learn more.
Questions?
Filing your taxes as a work-from-home employee, whether that status is a permanent position or a temporary solution, gives you the opportunity to claim the home workspace expenses that you are rightfully owed. However, it also requires a little more careful consideration about what items can be included and what percentage thereof.
Need some assistance calculating what you can claim? Contact us. We’d love to help!
