There are two new methods introduced for employee’s claiming workspace in your home deductions on your 2020 tax return.
The first and easiest of these claims is the flat rate calculation method. To be eligible you must be working from home due to Covid-19. You must also work from home more than 50% of the time for a period of at least 4 consecutive weeks. If you meet these criteria you are eligible for the $2/day flat rate, to a maximum of $400. If you are eligible and wish to take advantage of this claim, no form is required from your employer. However, I require a form to be completed and the link can be found below.
Note that this is not a credit on your return, you are not reimbursed this amount. It is a deduction. A deduction reduces the amount of income you pay tax on. As such it reduces your overall tax amount owing. As an example, if you worked from home for 3 months, your flat rate amount may be $120. If you are in a 20% tax bracket ($120 X 20%) your tax savings amount is $24. Please also keep in mind there will be additional tax preparation fees for the work involved in making these claims on your behalf.
If you wish to forgo the flat rate claim and file using your actual expenses, please note that you will be required to have your employer fill in either form T2200S or T2200. Not all of your home expenses are eligible for use. You may claim your electricity, heat, water, internet, cell and some repairs and maintenance. You may not claim mortgage interest, house insurance and property taxes.
You may only claim expenses for the period that you were working from home. You are required to determine what percentage of your home is being used as your workspace and that is the percentage of the expenses you use. If your work space is shared (dining room table) as opposed to a dedicated office, you must further reduce your claim by the percentage of hours in a day your office is used for business.
After all these calculations are complete, as above, this amount is a deduction and not credited back to you fully.
If you were previously working from home, you must continue to claim the same as you previously were and obtain a T2200 from your employer.
Please also note if you are self-employed and claim business use of home expenses there have been no changes to these claims.
If you wish to claim any of the work from home deductions as an employee, I would ask that you please fill in the form provided below. This will provide me with the details I need to proceed with your claim. Please note additional tax preparation fees will be charged for the claiming of this deduction based on the level of work required.
Click here to download: