Thanks to the internet, more and more Canadians have the option to work remotely. In fact, about one-fifth of Canadians currently work from home.
While 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 home office costs such as new computers, desks, and chairs.
Thankfully, there are ways to claim some of these work from home expenses to put money back in your pocket when you file your taxes.
Key Points
- The temporary flat rate method is no longer applicable.
- Many home office expenses can be deducted using the detailed method.
- Home office expense deductions are allowed whether your employer requires you to work remotely or if you choose to work from home.
Ways To Claim Home Office Expenses
The Canada Revenue Agency (CRA) has long recognized home expenses for work, and they have given Canadians ways to claim them.
Detailed Method
The detailed method allows Canadians working from home to claim home office expenses.
Who’s Eligible?
To be eligible to claim under the detailed method, the following must apply:
- Your employer requires you to work from home
- You work from home over 50% of the time for at least 4 consistent weeks in the year, OR you only use your home office space to earn employment income
- Your home office expenses are used specifically for your work
- You were required to pay for expenses related to your home office space
- You completed and signed Form T2200S or Form T2200 from your employer
It should be noted that even if you have the option to stay home or come into the office, you can still claim expenses as long as you meet the above criteria.
Find out when you’ll get a t4 vs a t4a.
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)
- Size of your workspace (a reasonable percentage if the home is open concept)
- Types of workspaces (shared area or designated workspace)
- Hours per week you use the space for work
- Number of workers in the home
- Change of workspace
For example, let’s say your home office represents 10% of your home. In this case, you could claim 10% of your rent, utility bills, and internet as eligible office expenses.
Types Of Expenses You Can Claim
As for specific types of expenses eligible, you can claim the following:
Work-Space-In-The-Home Expenses
Some of the best working from home tax deductions in Canada are the expenses directly related to your work space. This includes expenses for:
- Electricity
- Water
- Heat
- Internet access fees
- Rent
- Maintenance
Ultimately, you can claim expenses that are directly related to your work. For instance, if you use your internet and cell phone 40% of the time for work-related purposes, you may claim 40% of your bill when filing your taxes.
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
Office Supplies And Phone Expenses
This includes various items depending on whether you’re a salaried or commissioned employee. Examples include:
- 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.
Expenses You Can’t Claim
Work-from-home salaried and commissioned employees cannot claim the following:
- Mortgage interest
- Mortgage payments
- Internet connection fees
- Furniture
- Capital expenses (ie. replacing the roof)
- Wall decor
- Computer leases (commissioned employees only)
- Office furniture (ie. desks and chairs)
How To Make A Claim Using The Detailed Method
To claim expenses using the detailed method, you’ll need to use 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).
Can You Claim Work From Home Tax Deductions Using The Temporary Flat Rate Method?
The Temporary Flat Rate Method was introduced during the COVID-19 pandemic to help Canadians working from home, claim some of their expenses.
This method was intended for the 2020 tax year but was extended for the 2021 and 2022 tax years. However, this method no longer applies to subsequent tax years.
If you’re filing for any of the years from 2020 to 2022 you’ll need Form T77S – Statement of Employment Expenses for Working at Home Due to COVID-19. Then input the amount on Line 9368 from your T777S form on your tax return (on Line 22900).
Final Thoughts
Over the past few years, we’ve seen 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 to take advantage of working from home tax deductions.
