Canada's work-from-home credit allows those who work from home to claim certain home office expenses on their tax return. The CRA allows employees to deduct a portion of expenses like rent, utilities, internet, and office supplies, provided specific criteria are met.
Unlike the temporary flat rate method that was available from 2020 to 2022, employees must now calculate their actual work-from-home expenses and obtain a signed declaration from their employer.
Below, you'll find a review of the types of eligible and ineligible expenses, how to correctly fill out the required forms, and other information required to help you maximize your tax return.
Key Takeaways
- The work from home tax credit allows those who work from home to deduct work-related expenses from their taxable income.
- To claim expenses, you must meet specific eligibility criteria set by the CRA.
- Eligible expenses include utilities, rent, and certain maintenance costs.
- Proper documentation, including a completed Form T2200 from your employer, is required to support your claim.
- The temporary flat rate method for claiming home office expenses is no longer available.
What is Canada’s work-from-home tax credit?
Canada's work-from-home tax credit allows people to deduct certain expenses related to their home office from their taxable income. It's actually a deduction, not a credit, as it reduces your taxes by covering some of the costs of working from home.
Nobody wants to pay out of pocket in order to work from home. It's important to understand exactly which expenses are eligible and to document them carefully.
The temporary flat method is over
In response to the COVID-19 pandemic, the CRA introduced a temporary flat rate method for claiming home office expenses. This method allowed employees to claim a deduction without having to track detailed expenses or get signed forms from their employer.
However, this method is/was only available for the 2020, 2021 and 2022 tax years. For the 2024 tax year and beyond, employees must use the detailed method to claim home office expenses, which requires maintaining thorough records and including documentation provided by their employer.
Who can claim the work-from-home credit?
To be eligible to claim home office expenses, you must meet the following criteria:
- Work-from-home requirement: Your employer requires you to work from home. This should be part of a written or verbal agreement.
- Work duration: You worked more than 50% of the time from home for at least four consecutive weeks during the tax year.
- Expense responsibility: You paid for expenses related to your home office, and your employer did not reimburse you for these costs.
- Form T2200: You have a completed and signed Form T2200 Declaration of Conditions of Employment from your employer.
How to claim the work-from-home credit
To claim your home office expenses, follow these steps:
Maintain good records: Keep detailed records of all expenses throughout the year, including receipts and invoices, to support your claim. These records are invaluable in cases the CRA reviews.
Request the Form T2200: This form confirms the conditions of your employment and your requirement to work from home. You'll need to request it from your employer and ask that it be signed.
Fill in the Form T777: This is the Statement of Employment Expenses, used to calculate your total eligible expenses. It helps you determine the amount you can deduct.
File your tax return: Include the calculated deduction from Form T777 on line 22900 of your tax return.
What you can claim
These are the home expenses that are eligible for deduction:
- Utilities: Electricity, heat, and water expenses
- Internet fees: Your monthly internet bill, not including connection fees or modem/router rental fees
- Rent: Only a portion of the rent, a "reasonable" amount that corresponds to your workspace
- Maintenance and minor repairs: Can relate to the workspace as well as the rest of the home (minor furnace repairs, lightbulb purchases, etc.)
Employees working on commission may also be able to claim additional expenses like these:
- Home insurance premiums: Only a portion, as related to your workspace
- Property taxes: Only a portion, as related to your workspace
- Lease of certain equipment: Includes cell phones, computers, or tablets used for work
What you can’t claim
Of course, there are certain expenses that aren't eligible for the home office tax deduction. The CRA has clear guidelines on what cannot be claimed, even if the expense is related to your workspace.
These include:
- Mortgage payments and interest
- Furniture and décor
- Capital expenses (replacing windows, flooring, etc.)
- Home security systems
If you’re unsure about a specific expense, review the CRA’s official guidelines or consult a tax professional.
How much money can you get back?
The amount you can claim depends on several factors, including the size of your home office, your total eligible expenses, and your employment income.
To determine the size/percentage of your home office space that you can claim, you can use this formula:
Size of your workplace / Size of your home x 100
So if you determine that your office space is 40 m2 and your home is 400 m2, the calculation would look like this:
40 m2 / 400 m2 x 100 = 10%
For utilities, determining the amount to claim depends on whether the area you use as your workspace is a shared space or a dedicated workspace. For instance, if you use the dining room table for work during the day but it serves as the family eating area in the morning and evening, then it's a shared space. If you have a spare bedroom that you convert into an office and don't use for anything else, it's a dedicated space.
Using the 10% example above, if your workspace is a shared space and your electric bill is $500 for the month, you'd use this calculation to determine how much to claim:
$500 x 10% = $50
While there's no fixed limit for how much you can claim, the amounts must be reasonable. The CRA may review claims that seem excessive, so be sure that your calculations accurately reflect your workspace usage.
What if my spouse and I both work from home?
If you and your spouse both work from home, you can each claim home office expenses, but not for the same space. You must divide the workspace between both claims.
For example, if you share a home office and the workspace takes up 12% of your home, each of you could claim 6% of the eligible expenses. Alternatively, if you use separate rooms as offices, you can claim a percentage based on each space’s size relative to your home.
Proper documentation is important in these cases, as both claims must align with CRA guidelines. If you are both employees and meet the eligibility criteria, you should each complete a separate Form T777 and obtain individual Forms T2200 from your employers.
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$25 GeniusCash + Delicious meal choices with fresh ingredients + Front-door delivery.What forms do I need to fill out?
To claim home office expenses, you need to complete and submit the following forms:
- Form T2200 – Declaration of Conditions of Employment: This form confirms that you were required to work from home and paid for your own expenses. It must be signed by your employer.
- Form T777 – Statement of Employment Expenses: This form calculates your eligible expenses and determines the amount you can deduct.
- T1 General Tax Return: The final deduction amount from Form T777 is reported on line 22900 of your T1 return.
Important considerations when filling out the forms
- Get Form T2200 early: Your employer must sign Form T2200, so request it well before the tax deadline to avoid last-minute delays.
- Keep detailed records: Maintain receipts, bills, and invoices for all claimed expenses in case the CRA requests proof.
- Use accurate measurements: Calculate your workspace percentage correctly – overestimating could lead to an audit, while underestimating could reduce your deduction.
- Separate personal and work expenses: Only claim the portion of expenses directly related to your home office. The CRA does not allow personal expenses to be deducted.
- Ensure consistency with your spouse’s claim: If you and your spouse are both claiming home office expenses, ensure your calculations and workspace allocations match CRA requirements.
FAQ
Is there a tax credit for working from home?
No, the work-from-home deduction is a deduction rather than a tax credit. This means that it reduces your taxable income rather than providing a direct credit against taxes owed, but it still keeps money in your pocket.
What was the temporary flat method?
The temporary flat rate method allowed employees to claim $2 per work-from-home day, up to $500 annually, without tracking expenses. It was introduced in response to the COVID-19 pandemic and was available for 2020-2022, but has since been discontinued.
What counts as a workspace when working from home in Canada?
A workspace is an area in your home that you use for your job. It can be a shared space, such as the kitchen table, or a dedicated space, like a separate room used as a home office.
Can I claim my internet bill on my taxes?
Yes, you can claim a portion of your home internet costs if required for work. However, you can only claim the percentage related to your work use. Connection fees and modem/router rental fees aren't eligible.
What if my employer reimbursed me for home office expenses?
If your employer reimbursed you for certain expenses, you cannot claim them on your tax return. If your employer only reimbursed part of your expenses, you may be able to claim the remaining amount as a deduction.
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