What is the home office expenses for employees tax deduction?
The home office expenses for employees tax deduction is used to reduce income from employment and is for employees who, as a condition of employment, are required to maintain a home office. The deduction allows employees to claim eligible expenses they paid out, but were not reimbursed for by their employer, to maintain a home office.
Why and how did the home office expenses for employees tax deduction change for 2020?
Due to Covid-19, working conditions have changed and more employees are working from home using personal space, utilities, and incurring additional expenses to generate employment income.
To help cover the costs associated with working from home and to make the home office expenses for employees tax deduction more accessible to employees, CRA adjusted the eligibility criteria to include the changing working conditions due to Covid-19. They also added a simplified temporary claim method to calculate the deduction and created simplified forms to ease the administration burden for employers.
Who can claim the home office expenses for employees tax deduction?
Employees that are required to work from home or employees that worked from home due to the Covid-19 pandemic (even if it was a personal choice to work from home) can claim the home office expenses for employees tax deduction in 2020.
What are the claim methods and their main points for the home office expenses for employees tax deduction?
CRA’s Covid-19 response to the home office expenses for employees tax deduction means that for the 2020 tax year, there are two claim methods – the temporary flat rate method and the standard detailed method. Both methods and their main points are summarized below.
1. Temporary Flat Rate Method (new simplified method)
- You can claim $2 per day for each day you worked from home up to a maximum of $400.
- The employer is not required to complete form(s) T2200S, T2200, T777S, T777.
- The employee is not required to keep documents to support their claim.
- Each person working from the same home can make the claim.
- You do not need to calculate your workspace percentage or time usage to determine the amount of your claim.
2. Detailed Method
- You claim actual amounts and are required to keep documents to support your claim.
- The employer must sign and complete the relevant form(s) T2200S, T2200, T777S, T777.
- You need to use the workspace percentage or time usage to calculate the amount of your claim.
- The claim amounts for eligible expenses can be greater than the $400 maximum of the temporary flat rate method.
What are the eligibility criteria for the different claim methods for the home office expenses for employees tax deduction?
Eligibility for the flat rate method:
You must meet ALL the following conditions:
- You worked from home due to the Covid-19 pandemic, whether by direction from your employer or by choice (no employment contract is required, and the agreement can be written or verbal).
- You worked more that 50% of the time from home for a period of at least four consecutive weeks.
- You are only claiming home office expenses and are not claiming any other employment expenses.
- If your employer reimbursed you for some but not all your eligible home office expenses, you could still use the temporary flat rate method.
Eligibility for the Detailed Method:
You must meet ALL the following conditions:
- You worked from home due to the Covid-19 pandemic, whether by direction from your employer or by choice (no employment contract required, and the agreement can be written or verbal).
- Your workspace is where you worked more than 50% of the time for at least four consecutive weeks OR you used the workspace only to earn employment income and you used it regularly and continually for meeting clients, customers or other people while working.
- You can claim the portion of eligible expenses that were not reimbursed by your employer.
- The expenses were paid to earn employment income from work.
- The employer must sign and complete the appropriate form(s) T2200S, T2200, T777S, T777
For more detailed information about the home office expenses for employees tax deduction and CRA’s Covid-19 response for this tax deduction, click on the links below to be taken to CRA’s website.
- home office expenses for employees
- types of expenses
- calculating your expenses
- how to claim your deduction
- CRA FAQ