Working from home this year? You may be eligible for a new tax deduction

TORONTO —
With more Canadians working from home amid the COVID-19 pandemic, the Canada Revenue Agency (CRA) has simplified how employees can claim home office expenses[1] on their personal income tax return for 2020.

The CRA announced on Tuesday that those who worked from home more than 50 per cent of the time over at least four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim the home office expenses deduction.

The agency says the use of a shorter qualifying period will ensure that more Canadians can benefit from the deduction.

“The Government of Canada remains committed to helping Canadians cope with the impacts of the COVID-19 pandemic by making the home expenses deduction more accessible, and easier to claim,” Minister of National Revenue Diane Lebouthillier said in a press release[2].

According to the CRA, a “new temporary flat rate method” will allow eligible Canadians to claim a deduction of $2 for each day they worked from home because of COVID-19 up to a maximum of $400.

Under this new method, the CRA says Canadians will not have to get certain tax forms signed by their employers to be eligible.

To simplify the claims process for Canadians, the CRA says it has made amendments to its work-from-home tax forms (Form T2200S[3] and Form T777S) [4]and has launched a calculator[5] to assist with the calculation of eligible home office expenses. A list of all eligible home office expenses is available online[6].

“The temporary flat rate method and the new user-friendly calculator will make it easier for more Canadians to claim the deductions and is one more demonstration of the CRA’s commitment to ensuring our tax system meets the needs of Canadians,” Lebouthillier said in the release.

The CRA notes that the new rules to the home office expenses deduction is only applicable to the 2020 tax year.

As well, the agency says employees with larger claims for home office expenses can still use the existing detailed method to claim a deduction if preferred.

The CRA reported that 174,210 Canadians applied for the work-space-in-the-home deduction for the 2018 tax year, which accounted for $271,866,000 or an average of $1,561 per person.

According to Statistics Canada, an estimated 2.4 million Canadians who do not normally work from home were doing so in October.

References

  1. ^ home office expenses (www.canada.ca)
  2. ^ press release (www.canada.ca)
  3. ^ Form T2200S (c212.net)
  4. ^ Form T777S) (c212.net)
  5. ^ calculator (www.canada.ca)
  6. ^ available online (www.canada.ca)

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