We can all agree last year was a tough one, but as always, Fint.Cloud is here to help you find a silver lining.
In November 2020, the Canada Revenue Agency (CRA) announced it had simplified the rules for tax deductions as it relates to working from home. With so many people saving money on costly commutes and expensive work lunches, a tax deduction makes the ‘WFH life’ even sweeter. Statistics Canada reported 3.3 million Canadians had transitioned to working at home due to the pandemic as of April 2020, so this tax deduction will have a considerable impact for workers nation-wide. The tax deduction covers home office expenses that you paid, such as rent for your work-space-in-the-home, electricity and home internet fees amongst other costs.
Anticipating an increased number of applicants, the CRA has made the process easier to apply, including: a simplified form (T2200S), no need to measure your office space, and a temporary flat rate method for finding out how much you are eligible for.
|Eligibility Checklist for the 2020 ‘Work from Home’ Tax Deduction
If you meet ALL of the criteria:
Simplified vs Detailed – What’s the Difference?
With the simplified claiming for home office expenses, a new temporary flat rate method has been introduced by CRA. You can claim $2 for every day you worked from home in 2020, up to a maximum of $400 (200 days per individual). There’s no form required to be signed by your employer, so that alone makes it an appealing choice with less paperwork. It’s important to note that more than one person per household can claim the deduction as long as each household member is eligible, but you won’t be able to claim any other employment expenses (Line 22900) with this flat rate method.
Conversely- maybe you’re not new to the Zoom and pajama-bottoms lifestyle! If you worked from home for more than 200 days, you might be eligible for more than $400 in tax deductions. Then, the detailed method can be used to ensure you capture all the deductions you’re eligible for. But, that’s become easier too with the resources below:
- List of eligible home expenses (sadly, your upgrade to a sit-stand desk and lovely house plants didn’t make the cut)
- T2200, plus T2200S and T777S – new simplified forms, hooray!
- Expense calculator – step by step guide that helps you determine your expenses
As you know, tax deadlines were extended due to COVID-19 in 2020. This year the deadlines are back to normal timing, so make sure you’re prepared. Here’s the government deadlines for filing your 2020 taxes.
If you have any questions about this post or tax deductions in general, reach out to us!