If you are one of the millions of Canadian employees that worked from home this past year due to COVID-19, you might be eligible to claim home office expenses on your personal tax return. Lets find out.
There are plenty of in-depth guides available, but this is a quick look to help you determine your eligibility and to decide what method of claim to use.
This information was gathered directly from the home office expenses for employees section on the CRA website.
Basically there are two options to claim home office expenses for employees'. The “temporary flat rate method” and the “detailed method.” Below is a comparison of both regarding eligibility, explanation, pros and cons of each and other factors to consider before choosing which method is right for you.
Eligibility
Flat Rate Method- (must meet all conditions)
· You worked more than 50% of the time from home for a period of at least four consecutive weeks during 2020 (required or by choice)
· You are only claiming home office expenses and are not claiming any other employment expenses
Detailed Method- (must meet all conditions)
· You worked more than 50% of the time from home for a period of at least four consecutive weeks during 2020 (required or by choice)
· You have a completed and signed copy of a Form T2200 or Form T2200S from your employer
Explanation
Flat Rate Method
· You can claim $2 for each day you worked from home in 2020 due to the COVID-19 pandemic, up to a maximum of $400
· Your employer is not required to complete and sign Form T2200
· You are not required to have receipts to support your claim
Detailed Method
· You can claim the proper proportion of the actual amounts you paid, supported by documents
· You must have a completed and signed Form T2200 or Form T2200S from your employer
Pros and Cons
If you are eligible for both methods, here are some pros and cons to help you determine which one may be best for you.
Flat Rate Method
Pros: This method is by far the simplest to claim as no extra paperwork is required. You do not need to obtain forms from your employer, track any expenses, gather receipts or do any workspace calculations.
Cons: The maximum amount you can claim is capped at $400 which would require you to have worked a full 200 days from home. Note: days off, holidays, sick days and other leaves of absence are not considered to be a workday.
Detailed Method
Pros: Can be more lucrative in certain situations.
Cons: This method is more complex and requires much more time to track expenses, perform workspace calculations, gather receipts, and requires a signed form from your employer.
Other Factors
Here are some other factors to consider in determining which method might be best for you.
· More than one person working from the same address can use the flat rate method provided they also meet eligibility requirements
· Those taxpayers who rent, rather than own their home, may have an advantage in using the detailed method because rent is an allowable expense whereas mortgage payments are not
· Those taxpayers who are in higher income brackets may want to consider the detailed method as they usually get a higher amount back on deductions.
If you are still uncertain which method to use there are some handy dandy calculators on the CRA website that may help determine the best fit for your personal tax situation.
Looking for assistance in preparing your 2020 T1 tax return? You can request a fee quote from Airdrie Tax Services here.
Cheers and Happy Deducting!