As you’re getting your 2020 tax year together, you may be scratching your head as to what can and can’t be deducted if you had to work at home due to COVID. Well, let me illuminate what is and isn’t deductible, and the new simplified way of claiming deductions introduced by Canada Revenue Agency.
As always, be sure to talk to your tax preparer to ensure that you’re including all the available deductions applicable to your tax situation.
For 2020, there is the same old T2200 way to deduct work-at-home expenses as an employee. This has always been in place, so if you’ve done it before you’ll know the drill. If you’re new to working-at-home and the change is due to COVID-19, know that your employer is responsible for authorizing deductions under the T2200s, verifying that you’re eligible for the work-at-home expenses.
The T2200s offers two calculations as a mechanism to allow so many people forced unexpectedly to work-at-home in 2020 due to the pandemic but to ease the burden on those employers who now may have hundreds of employees working remotely. This simplified approach allows for a flat daily deduction rate of $2 to a maximum of 200 days, or a maximum deduction of $400. Alternatively, you can provide a detailed calculation.
The Paperwork
If you’re working at home due to COVID-19, you don’t need to submit the T2200s with your return, but should keep it on hand if needed (this is the one with your employer’s signature on it). Instead, you’ll complete and submit the Statement of Employment Expenses for Working at Home Due to COVID-19, Form T777s outlining your deductions in the flat rate or detailed method.
For those who have significant work-at-home expenses and are going to be completing the detailed calculation method, here’s some clarification on what IS and is NOT considered allowable deductions:
Eligible Deduction |
Not Deductible |
| Office supplies (if your employer is not reimbursing you) | Masks – unless your occupation requires it |
| Cell phone (certain conditions apply) | mortgage interest |
| Electricity, heat, water | principal mortgage payments |
| utilities portion (electricity, heat, and water) of your condominium fees | home internet connection fees |
| home internet access fees | furniture * |
| maintenance and minor repair costs
|
capital expenses (replacing windows, flooring, furnace, etc) |
| rent paid for a house or apartment where you live | wall decorations |
| If you’re a commissioned employee, you can also claim:
home insurance property taxes lease of a cell phone, computer, laptop, tablet, fax machine, etc. that reasonably relate to earning commission income |
- note that for 2020, CRA is allowing employers to reimburse employees up to $500 worth of expenses, including office furniture, tax-free, without having to get a signed T2200
Depending on your situation, you may come out ahead if you claim the T2200S of $2/day up to $400, but file based on what’s most applicable to your situation.
Have questions? Always contact your tax preparer to ensure you’re including everything for your tax situation, or contact me for additional guidance.