In 2020, many Canadians were forced to change the way they worked. This meant that employees worked from home as a precaution to limit the spread of Covid-19. They found themselves working at their dining room table, in their bedroom or on their living room couch. With this new reality for millions of Canadians, the Government of Canada introduced a simplified process for claiming home office expenses for employees working from home due to the COVID-19 pandemic.
The Government of Canada introduced the temporary flat rate method that will offer a simplified way for employees to claim home office expenses of up to $400 on their 2020 tax return. To qualify for this deduction, employees must have worked from home more than 50% of their time over a period of at least four consecutive weeks in 2020 due to COVID-19. A deduction of $2 can be claimed for each day they worked home in 2020 up to a maximum of $400. A day worked from home includes any day that an employee worked full-time or part-time hours from their home. This simplified method does not require employees to maintain receipts for their home office and greatly reduces the time required to input the information into their 2020 tax return. Furthermore, under this new method, employees will not have to get Form T2200 / Form T2200S completed and signed by their employer. If you qualify for this deduction, please visit the government calculator to help assist with determining your eligibility and the maximum amount you can claim.
The simplified method does not replace the detailed method of calculating home expenses. Therefore, if employees worked from home due to COVID-19 and would like to use the detailed method, the government has introduced a new simplified form that employers can complete that will allow their employees to claim home office expenses. The detailed method requires employees to have receipts for their home expenses and the completed and signed Form T2200S/ Form T2200 from their employer. This method would allow employees to claim expenses including rent, electricity, heat, water, internet as well maintenance costs that were incurred for the period you worked from home. Other employment related expenses would also be deductible such as postage, stationary, ink cartridges and cell phones used for business. A full list of eligible expenses can be found on the government calculator. These expenses are limited to the space of the home office and the period that they worked at home during the year.
These changes to the home office expenses will greatly assist employees who found themselves working from their home during the COVID-19 pandemic. For assistance calculating your home office expenses or determining which method you should use when preparing your tax return for 2020, please contact one of our specialists who will be able to assist you.