How Canadians can claim the $400 work from home tax credit

Canadians can claim up to $400 in stay at home expenses if they had to work from home due to the COVID-19 pandemic.

The Canada Revenue Agency (CRA) introduced a new temporary flat rate method to simplify the process of claiming the deduction for home office expenses for the 2020 tax year.

In order to apply, you need two forms filled out, as well as a calculator to figure out the total costs of your office expenses.

“As an employee, you may be able to claim a deduction for home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses). This deduction is claimed on your personal income tax return. Deductions reduce the amount of income you pay tax on, so they reduce your overall income tax liability,” the CRA said.

Who is eligible?

You must meet all of the criteria in order to be eligible for the deduction:

• You worked from home in 2020 due to the COVID-19 pandemic, or your employer required you to work from home
• You worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020
• Have a completed and signed Form T2200S or Form T2200 from your employer (only applicable if the detailed method is used to complete the claim)
• The expenses are used directly in your work during the period

The CRA said the use of a shorter qualifying period would ensure that more employees can claim the deduction than would otherwise have been possible “under longstanding practice.”

How to figure out your claim

The new temporary flat rate method simplifies your claim for home office expenses.

According to the CRA, you are eligible to use this new method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020 due to the pandemic.

You can claim $2 for each day you worked from home during that period, plus any additional days you worked at home in 2020. The maximum you can claim using the new temporary flat rate method is $400 — 200 working days — per individual.

Each individual working from home who meets the eligibility criteria can use the temporary flat rate method to calculate their deduction for home office expenses. This means multiple people working from the same home can each make a claim.

It’s important to note this method can only be used for the 2020 tax year.

What counts as a workday?

Any days where you worked full-time or part-time hours from home. But days off, vacation days, sick leave, or other leaves of absence do not count.

What can you claim?

The CRA has expanded the list of eligible expenses that can be claimed to include home internet access fees.

A comprehensive list of eligible home office expenses has also been created, to include:

What you need to submit the claim

The CRA created a simplified Form T2200S (a shorter version of the T2200 form that your employer completes and signs if you worked from home in 2020 due to the pandemic and are not using the temporary flat rate method) and Form T777S (used to calculate your claim for home office expenses).

For the simplified method, all you need is Form T777S. On this form, you enter your claim and attach it to your 2020 income tax return.

You then claim the deduction on your tax return by entering the amount from Line 9939 on Form T777S to Line 22900, “Other employment expenses,” on your 2020 income tax return.

Form T777S must be filed with your tax return.

It’s important to note that each year the CRA conducts a number of review activities to maintain the integrity of, and the Canadian public’s confidence in, the Canadian tax system. The CRA may review your claim to validate your eligibility.

There is also a calculator to help you claim the home office expense deduction that you are entitled to.

For the detailed method, you need to complete Form T777S or Form T777 and get a completed and signed Form T2200S or Form T2200 from your employer.

For those who have made their dining room table their office space, there’s some compensation ready for you to claim.