DFK Tax Newsletter

 

Issue 1 - 2023 Edition - March 6, 2023 - Wendy Wong, CPA, CA

Claiming Working from Home Expenses

By Wendy Wong, CPA, CA, Senior Manager, Tax & Advisory Services, GGFL Chartered Professional Accountants

For your 2022 personal tax filing, the Canada Revenue Agency has two options that will allow employees to report expenses they incurred while working from home.
All eligible members of a household who worked from home can each claim working from home deductions using either method.

Flat Rate Method

The first, and most straight-forward way to claim your working from home expenses, is to use the ‘temporary flat rate method’.  This method allows you to claim $2 for each day you worked from home during 2022, up to a maximum of $500.  To be eligible for the flat rate method, you must have worked from home more than 50% of the time for a period of at least four consecutive weeks due to COVID-19.

If you have been working from home throughout out 2022, it may be tempting to claim the maximum 250 days.  But be careful; sick days, vacation days, statutory holidays or any other leaves of absence do not count as eligible work days and should not be included when tallying up the numbers of days you worked from home.
If you use the flat rate method you cannot claim any other additional home office expenses. The advantage is you do not need a lot of supporting documentation, you only have to keep track your eligible work days.

It is widely expected that 2022 will be the final tax year that CRA will allow employees to claim this expense.

Detailed Method

If your eligible home office expenses are greater than $500 you can opt to claim the costs using CRA’s ‘detailed method’.

The detailed method allows you to claim office supplies, phone service plans and work-related long distance phone charges, and a portion of many of your household bills, based on the percentage of space of your home that is used for your office. The CRA website offers guidance on how to calculate the percentage of your home being used for your home office.

A portion of your household expenses that can be claimed as an office expense include:

  • Electricity
  • Heat
  • Water
  • Home internet
  • Maintenance and minor repairs
  • Rent paid for your home

Commission employees can also claim:

  • Home insurance
  • Property taxes
  • Lease of cell phones and laptops that reasonably relate to earning commission income.

If your employer reimbursed you for any of these expenses, you cannot claim them on your tax return.

You cannot claim:

  • Mortgage interest and principal payments
  • Internet connection fees
  • Furniture
  • Capital expenses such as new windows, flooring or a furnace

If you choose to use the detailed method to claim your home office expenses, you will need to obtain from your employer either Form T2200S  or Form T2200 and you will need to complete either Form T777S or Form T777 in your T1 personal income tax return.

The detailed method requires you to track all eligible expenses, and retain documentation and original receipts (credit card receipts are not accepted) for three years.

More information on both the flat rate and detailed methods can be found on the CRA website.