The COVID-19 pandemic has seen the loss of 355,000 Ontario jobs in 2020, as well as shortened work hours for 765,000 Ontario residents. Canada itself lost 213,000 jobs just in January 2021, bringing the unemployment rate up to 9.4%. More and more Canadians have spent increased amounts of time at home, especially those who have been fortunate enough to retain the ability to work from home. Although many types of employment can be reasonably carried out at home, working from home poses many new costs for Canadians, like increased electricity bills, internet consumption, and other home office costs such as new computers, desks, chairs, etc. Thankfully, there are ways to claim and deduct some of those expenses.
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Two Ways to Claim Home Work Expenses
The Canada Revenue Agency recognized home expenses for work even before the COVID-19 pandemic, and they have given Canadians two methods to claim work from home expenses. The rise of the pandemic resulted in a few adjustments to what you can claim and deduct, but here are the two ways you can start to claim your expenses. The temporary flare rate method and the detailed method.
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Temporary Flat Rate Method
This new method was introduced to help Canadians working from home, due to the COVID-19 pandemic, have an easy option to claim some of their expenses. This year’s situation was a first for many, so this method offers a bit more convenience for people to recoup some of their home office costs.
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Who’s Eligible
To be eligible to claim under the temporary flat rate method, you need to have:
- Worked from home due to the COVID-19 pandemic in 2020
- Worked from home more than half of the time for four consistent weeks in 2020
- Be claiming home office expenses and no other employment expenses on line 22900
- Not received reimbursement from your employer for your home work expenses.
All of these requirements must be met for you to be able to use the temporary flat rate method.
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What and How Much Can You Claim
Using this method, you will claim part of your home work-related expenses like rent, electricity, home internet, office supplies, and phone bills. This list of expenses was actually expanded this year due to the pandemic. The convenient aspect of the temporary flat rate method is that you can claim 2$ for each day worked from home in 2020, up to a maximum of 400$. You don’t need to calculate percentages of certain bills or expenses, as the 2$ has already been predetermined.
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How do You Make a Claim Using The Temporary Flat Rate Method
To make a claim using the temporary flat rate method, you must use Form T777S – Statement of Employment Expenses for Working at Home Due to COVID-19. Input the amount from Line 9939 of this form into Line 22900 (“Other employment expenses” on your 2020 income tax return.
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Detailed Method
Who’s Eligible
To be eligible to claim under the detailed method you need to have:
- Worked from home in 2020 because of the COVID-19 pandemic, or your employer required you to work from home regardless of the COVID-19 pandemic
- Worked from home over 50% of the time for a period of at least 4 consistent weeks in 2020
- Completed and signed Form T2200S or Form T2200 from your employer
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What and How Much Can You Claim?
The amount of money you can claim with the detailed method depends on a few factors related to the amount of time you spend working at home and the space you use. More specifically, your claim amount is dependent on:
- Size of your home (including bathrooms hallways and other rooms) and work space (a reasonable percentage if the home is open concept)
- Types of work spaces (shared area or designated work space)
- Hours per week you use the space for work
- Number of workers in the home
- Change of work space
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As for specific types of expenses eligible, you can claim the following:
Work-space-in-the-home expenses: This includes expenses for electricity, water, heat, internet access fees, rent, and maintenance. If you are a commissioned employee, you can claim home insurance, property tax, and cell phone costs. If you are a salaried employee, you cannot claim home internet connection fees, mortgage payments, wall decorations, or furniture.
There are some limitations to the work-space-in-the-home expenses however, such as when you:
- Only work part of the year at home
- Have multiple income sources
- Experienced expenses higher than your income
Check out how the tax rates affect the way you’ll be taxed.
Office supplies and phone expenses: This includes various items depending on whether you’re a salaried or commissioned employee. Examples include a laptop, envelopes and folders, printer paper, stamps, ink cartridges and toner. You might be able to claim some phone expenses as well, provided that you meet certain conditions.
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How to Make a Claim Using the Detailed Method
To claim expenses using the detailed method, you’ll need to use Form T77S– Statement of Employment Expenses for Working at Home Due to COVID-19 or Form T777– Statement of Employment Expenses. Input the amount on Line 9368 from T777S/ Form T777 on Line 22900 on your tax return (Other employment expenses).
Additional Reading
Frequently Asked Questions
Am I eligible to claim home office expenses if working from home was my choice?
Will I be able to use the temporary flat rate method in future years?
Final Thoughts
COVID-19 has caused many shifts in the way we interact, work, and live. Despite increased costs associated with working from home, there are thankfully some tax methods to help you recover these new costs. Although the CRA has many links and resources to help you file your taxes properly, make sure to consult with an accountant or tax professional if you need support in filing this year.
