Due to the emergence of the COVID-19 pandemic, 2020 proved to be an extremely challenging year for us all. We were forced to adapt to an everchanging landscape, and experienced a wide array of changes in both our personal, and professional lives. Among the more significant of these changes, was an increase in the time spent working from home.
Fortunately, the CRA has simplified the process of claiming a tax deduction with respect to home office expenses by introducing the new temporary flat rate method, which makes claiming home office expenses simpler. This deduction serves to reduce taxable income, and as such, reduces your overall tax liability.
While you may, or may not, have been aware of this new method, SHARP & Associates has you covered, with the answers to any questions you may have had.
1. Am I eligible to use the new temporary flat rate method?
In order to use the new method, you must meet the following criteria:
You worked from home in 2020 due to the COVID-19 pandemic.
You worked more than 50% of the time from home, over a period of at least four consecutive weeks.
You are claiming for only home office related expenses.
Your employer did not reimburse all of your home office expenses.
2. How is the claim calculated?
If you meet the criteria laid out above, you can claim $2 for every day worked from home, up to a maximum of $400 (200 days)
3. What qualifies as a day working from home?
Days where you worked full-time or part-time hours from home count as a work day. Days off, vacation days, sick days, or other leaves of absence do not count.
4. If multiple people worked from home in the same residence, can everyone claim the deduction?
Each individual who qualifies can use the temporary flat rate method to calculate their deduction. This means that multiple people can make a claim.
5. Are there any other requirements in order to claim the deduction?
The new simplified method does exactly that – makes the process simpler. As such, you are not required to keep supporting documents, calculate the size of your work space, or have forms T2200S or T2200 completed and signed by your employer. (Note that the CRA does conduct regular reviews, and may review your claim to ensure your eligibility)
6. How do I claim the deduction using the temporary flat rate method?
In order to claim the deduction, all you’re required to do is use “Option 1 – Temporary flat rate method” on form T777S, and enter the amount from line 9939 from this form on line 22900 of your 2020 income tax return.
7. Which tax periods are eligible for the deduction using the temporary flat rate method?
Currently, the method can only be used for the 2020 tax year, however tax regulations are always changing, and we’re here to keep you informed, so check back regularly!
And, of course, whether you have home office expenses to claim or not, we’re always here to help. If you need to file a tax return, click the Get in Touch button to get started, and our team of experts can help make this tax season a breeze!
As always, if you have any questions regarding home office expense deductions on your taxes, or are looking for assistance with any aspect of you small business – from bookkeeping to tax advisory, our team of experts is here to help.
Click the “Get in Touch” button to get started.
Click below to visit the CRA website for further details:
コメント