Since the beginning of the pandemic, many workforces have shifted from working in an office setting to having employees creating an office at home. This has forced many employees to purchase new furniture and office supplies to continue their job. The question is, can you write off these new expenses on your next tax return?
Generally speaking, to be able to deduct home office expenses, an employee would need to meet the following criteria:
- A contract of employment where you had to provide and pay for the supplies.
- You used the supplies directly in your work.
- Your employer has not repaid and will not repay you for these expenses.
- A T2200 form, Declaration of Conditions of Employment, which has been completed and signed by your employer.
Here are some of the things that may or may not be able to be deducted with or without a T2200.
Masks
Masks are only deductible if you are working in a field that requires it or if your T2200 permits it. For everyone else, they are not deductible.
Home Office Furniture
Home office furniture is not deductible as it is considered a capital expense that cannot be deducted by employees.
Workspace Expenses
Some workspace expenses that can be deducted are rent, home insurance, electricity/hydro, and cleaning materials used for maintaining your home. The full amounts are NOT deductible, as you can only use a certain percentage of the total cost that pertains to your home office space that you are using for your employment.
Mortgage and Property Taxes
These expenses are only deductible if you work on commission. If this is the case, then you can deduct a reasonable amount from the total costs with your T2200.
Internet
You can not deduct the monthly services fees for the internet unless your company fills out a T2200 and even then it can be tricky as it is hard to show how much is used directly for your employment.
Phones
With a T2200, your mobile phone bill can be considered deductible if:
- The plan picked must be reasonable in its cost.
- You must be able to show that substantial minutes or data are used directly for your work and might be asked for documentation to prove this.
Special Clothing and Tools
Special clothing that you have to wear for your job and the cost of any tools that are considered to be equipment are not tax-deductible. However, the exception to this is if you are a tradesperson (including an apprentice mechanic), as you may be able to deduct the cost of eligible tools you bought to earn employment income.
It should also be noted that if your employer reimburses you for some or all of the cost of home office equipment, the Canada Revenue Agency (CRA) has stated that any reimbursements up to $500 for equipment will not be considered a taxable benefit. Any reimbursement after the $500 is considered taxable.
The bad news is if you are self-employed, unfortunately, nothing has changed and nothing has been announced as of yet for anything that can be claimed on your 2020 tax return. This doesn’t mean there will not be any changes to your tax return next year. But, as it currently stands, there have been no official changes and you should continue with your regular tax processes until anything is officially announced by the CRA. However, there are changes in the works with a special T2200 Covid Addition that has yet to be approved at the time of publishing.
If you need further assistance figuring out your 2020 tax return deductions, Keenans Accounting Service is here for you. Just give us a call at 705-526-7628 to arrange a consultation by phone or via Zoom meeting. We are practicing social distancing while working remotely, and with reduced staff so please leave us a message, and we will get back to you as soon as possible.