Determine your eligibility to claim up to $400 in work expenses

The COVID-19 lockdown and self-isolation policies forced many Canadians to work remotely in 2020.  Canadian Armed Forces members and their families may be eligible to claim work-from-home expenses on their 2020 tax returns.

“This is a new, temporary tax deduction created by the Canada Revenue Agency (CRA). It acknowledges that many Canadians had to work from home in 2020 and there are costs associated with that,” says SISIP financial planner Gerry Clements, BBA, FMA, CFP. “The good thing is that CRA has made it fairly straight forward to allow people to deduct a percentage of those expenses with simplified forms and filing.”

Using the temporary flat-rate method, multiple people in your family can claim up to $400 in work-related expenses if they were required to work from home during the pandemic.

But if your work-related expenses exceeded $400 in 2020, you may be eligible to claim more.


Determine your eligibility to claim up to $400 in work expenses

If you worked from home for four consecutive weeks in 2020, you can claim $2-per-day in expenses on your annual income tax return, up to a maximum of $400, (or 200 days).

Eligibility criteria:
  • You worked at least 50% of hours from home over four straight weeks at some point in 2020.
  • You or your employer required you to work from home because of the COVID-19 pandemic.
  • You have expenses directly associated with the cost of working from home, (ie: high-speed internet, hydro costs, printer ink).


2 ways to claim your 2020 work-from-home costs

With the temporary flat-rate method, you can make the claim on your own without detailing your expenses or doing any fancy calculations.

On the other hand, if you think you’re eligible for more than $400 in expenses, your employer can validate your work-related costs as part of your 2020 annual tax return. But you will have to itemize these costs in detail.

This CRA calculator can help you determine your work-related expenses and decide which filing method is best for you.

1) Flat-rate method: Quick, Do-it-yourself claim up to $400

With this temporary flat-rate method you don’t have to report your work expenses in detail on your tax return. Providing you meet the eligibility criteria, you can claim $2 per day for up to 200 days of work in 2020.

To calculate how much you can claim, simply multiply the number of work-from-home days by $2.
“If you’re eligible, enter the total amount calculated on line 22900 of your tax form, called “other employment expenses”, which in turn deducts the amount up to $400 from your taxable income,” says Clements.

Note that vacation days, sick leave or other types of leave cannot be included in your calculation. And if you use the flat-rate method, you can’t claim any other employment-related expenses on your tax form.

“It is a tax deduction, which helps to reduce your total income, and in turn lowers the amount of income tax you pay,” says Clements. “Keep in mind, this deduction is not transferable between spouses. But if more than one person in your household worked from home in 2020 and meets the criteria, each individual can file separately for the deduction.”

2) Detailed method: Claiming more than $400 in work-related expenses

If your employer required you to work from home for more than 200 days in 2020, you could be eligible to claim more than $400 in work-related expenses for the year. CRA has also simplified the claims process for the detailed method. But you will be required to have a home office that’s only used for work and do some calculations based on the square footage of that work space, and the percentage of hours you’ve worked.

You will need to submit two additional forms with your annual income tax documents: Both forms must be submitted with your 2020 tax return documents.



Common home office expenses to claim on your 2020 tax return

Although the list of claimable expenses for work-from-home employees is not as comprehensive as the one used by people who operate a business out of their homes, you can calculate a portion of the following common expenses associated with working from a home office:

• rent paid for your house or apartment
• utilities, including hydro, water and heating bill
• minor home maintenance costs, including minor repairs, cleaning supplies, light bulbs and paint
• internet, cell phone and long-distance costs
• office supplies, like paper, pens, folders, sticky notes, postage, printer ink

Employees who earn commission income can also claim property taxes, home insurance and the lease of a cell phone, computer, laptop, tablet related to their commission income.

Note that you cannot claim any part of your mortgage, basic landline services, nor capital costs, like new furniture, computer equipment or large home renovations like window replacements or retrofitting.

View CRA’s full list of claimable home office expenses.
 


Take advantage of this temporary tax deduction

For now, the temporary flat-rate claim for work-related expenses only applies to at-home work you did for an employer in 2020. So make the most of it while you can, says Clements.

“It may not sound like a lot, but even saving a bit of income tax is a good thing,” says Clements. “People don’t want to pass up this opportunity.”
 
“It’s not how much money you make, but how much you keep, [and] how hard it works for you…”
 Robert Kiyosaki