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Can I write off work from home expenses?
If you want to start a new business, become a consultant, or be a freelancer, working from home is a cheaper way to cut overhead expenses like leasing an office space. A home office can help you get your business off the ground and the Canada Revenue Agency (CRA) recognizes this by offering generous deductions you can claim at tax time.
For the COVID-19 Tax Year of 2020
If you are working from home due to COVID-19 you may be eligible for the CRA’s new temporary flat rate method to simplify claiming the deduction for home office expenses for the 2020 tax year.
The new temporary flat rate method simplifies your claim for home office expenses. You are eligible to use this new method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020 due to the COVID-19 pandemic.
You can claim $2 for each day you worked from home during that period plus any additional days you worked at home in 2020 due to the COVID-19 pandemic. The maximum you can claim using the new temporary flat rate method is $400 (200 working days) per individual. A comprehensive list of eligible home office expenses has also been created.
Each individual working from home who meets all the eligibility criteria can use the temporary flat rate method to calculate their deduction for home office expenses. This means multiple people working from the same home can each make a claim.
This method can only be used for the 2020 tax year.
NOTE: If you think you will be working from home more frequently in the 2021 tax year due to COVID-19 you should start collecting and keeping a file of all receipts for the expenses accumulate.
For Non-COVID Tax Years
According to the CRA, you can file for a tax deduction on a home office if your employer requires you to work from home for more than 50% of the year. In other words, you must meet the following criteria:
- You maintain a home office in order to conduct most of your daily job duties there.
- You meet with clients (face-to-face) there on a regular, continual basis.
- Your employer isn't already reimbursing you for those expenses.
As long as your employer agrees this is a requirement of the job you can request that they fill out a T2200 (Declaration of Conditions of Employment) form. You would need a T2200 form only if your employer isn't already paying you an allowance for your home expenses through your regular paychecks. For example, if your employer says we are offering you a $100 a month allowance to cover your home office expenses on top of your regular salary pay, you would not require a T2200 form and would not be eligible to claim your expenses at tax time.
You don’t need to submit the T2200 form when you file your yearly taxes but you do need to keep it in your files in case the CRA decides to audit you. Audits are intended to ensure taxpayers are fulfilling their tax duties. If you are audited by the CRA and found to be claiming a false expense deduction on your income tax filing you will have to pay that money back plus penalties.
Work From Home Employees
Once you meet the eligibility criteria as an employee, you can claim a portion of the following expenses:
- Cleaning and maintenance
- Minor repairs
Self-Employed and Freelance
As a self-employed person, consultant, or freelancer you can claim the following:
- Cleaning and maintenance
- Minor repairs
- Mortgage interest (only self-employed can claim this)
- Property taxes (only employees and self-employed who work on commission can claim this)
- Home Insurance (only employees and self-employed who work on commission can claim this)
The CRA recognizes the above lists as legitimate expenses related to running a home office or home business and a portion of those could be deducted at tax-filing time. You can also include things like minor repairs or renovations made to your home to designate a workable office space. For instance, if you had to section off a part of your house to make an office, but had to paint or fix flooring in your house that extended to the area of your office, you could claim that portion of repairs.
In either case, how much you can deduct is based on a calculation of the portion of your home used as an office. This is different in every case and the calculation varies and is dependent on the size of your home office comparable to the size of your entire home. You can find out more about how to calculate home expenses from the work-space-in-the-home expenses page.
For More Information
- Tax Benefits and Credits for People - Find more tax benefits and credits available to people in Ontario. Search by age and special groups. From the Government of Ontario website.
- Newcomers to Canada - Explains how to file taxes as a newcomer when you first arrive in Canada. This information is only for tax newcomers, tax newcomers are those that have been in Canada for the first year only. From Canada.ca
- Frequently Asked Questions on Income Taxes - Answers to common questions about filing your income taxes. From the Canada Revenue Agency.
- Report a Lead on Tax Cheating - Explains what is considered cheating on taxes and benefits and how you can anonymously report a business or person you suspect is cheating on their taxes. From the Canada Revenue Agency.
December 16, 2020