Employees Claiming Office in Home Expenses for the 2020 tax year
To be eligible to claim home office expenses, employees must have worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020 due to the COVID-19 pandemic.
CRA has created a new simplified Form T2200S Declaration of Conditions of Employment for Working at Home Due to COVID-19. Employees who are claiming other employment expenses should continue to use Form T2200. There will be two methods to calculate home office expenses as an employee for 2020: the New Temporary Flat Rate Method and the Detailed Method.
- The New Temporary Flat Rate Method:
- This is a simplified process available only for the 2020 tax year.
- If eligible, employees can claim $2 per full or part-time day worked from home during 2020 due to the COVID-19pandemic up to a maximum of 200 days (totaling $400 maximum). There is no requirement to track or report detailed expenses, calculate the work-space size in the home, or have employers sign Form T2200S or T2200. However, employees must count the number of days worked from home for this method and apply a rate of $2 per day. Days off, vacation days, sick days and other leaves of absences do not count as “work days.”
- No other employment expenses over and above the maximum $2 per day, such as motor vehicle expenses, can be claimed.
- Detailed Method:
- This is a detailed approach where Form T2200S or T2200 must be signed by an employer and expenses must be tracked.
- CRA has expanded the list of eligible home office expenses:
- Salaried and commissioned employees can claim: electricity, heat, water, utilities portion of condominium fees, internet fees (but not connection set up fees or modem rental costs), maintenance and minor repair costs, rent paid for a house or apartment where you live.
- Commission employees can also claim: home insurance, property taxes, lease of a cell phone, computer, laptop, fax machine, tablet, etc. that reasonably relate to earning commission income.
- Expenses which cannot be claimed by any employees: mortgage interest, principal mortgage payments, home internet connection fees, furniture, capital expenditures (i.e. replacing windows, flooring, air conditioning, furnace), wall decorations.
- Certain office supplies and phone expenses can be claimed on Form T777S or T777 if your employer requires you to pay for these expenses as part of your employment duties.
- All home office expenses must be prorated based on the home office space as well as the number of hours worked in the office over the total number of hours in a week.
- Home office expenses claimed must be net of any reimbursements from your employer.
You cannot use work-space-in-the-home expenses to create or increase a loss from employment. If you cannot claim all your work-space-in-the-home expenses in the year, you can carry forward the expenses. You can claim these expenses in the next year as long as you are reporting income from the same employer.
Please feel free to reach out to our team at Sone Rovet Chasson LLP if you have any questions about this information.