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Work from Home Deductions

Did you work from home in 2020? Many Canadians were forced to leave their usual places of employment and work from home as a result of pandemic measures. CRA has modified their position on home expenses for 2020 only, and it may benefit many employees. Those employees may be allowed to deduct certain costs of working from home, but the deduction is not guaranteed.

Employer Reimbursements

You employer can reimburse you for up to $500 tax-free for the purchase of computer and home office equipment. Anything more than $500 will be taxable to the employee.

Home Office Expenses

Prior to the pandemic, one essential condition was that an employee must have been required to work from home under a contract of employment. For 2020 only, that has changed and employees can choose to deduct home office expenses under the Temporary Flat Rate Method, or the Detailed Method.

Temporary Flat Rate Method

CRA will allow employees a deduction of $2/day for up to 200 days, provided the employee worked from home at least 50% of the time for at least four consecutive weeks in 2020 due to the pandemic. Only days actually worked from home count, meaning sick days, vacation days and other days on leave do not count.

Detailed Method

Employees with higher expenses will likely prefer to file under the Detailed Method, which will require them to track expenses and receive from their employer a signed T2200S form, Declaration of Conditions of Employment for Working at Home Due to COVID-19, which is a shortened version of the usual T2200 and is new for 2020 only.

So why deduct these expenses?

If you qualify to deduct some of these home office expenses, they will reduce your personal taxable income, thereby reducing your overall tax expense. For example, if your employment income was $60,000 for the year, and your allowable employment expenses were $800, it could be tax savings of approximately $240 (assuming 30% tax rate, and is dependent on many

other variables).

Please contact us for further information. There are many considerations to be made and the details are specific to each situation.


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