2020 Tax Year – Information around Working From Home Tax Deduction due to COVID-19

Information from Camosun College regarding the new tax deductions around working from home (as posted on the Camosun website):

The Canada Revenue Agency (CRA) recently announced a temporary simplified method that will allow employees who worked at home due to COVID-19 more than 50 percent of the time for at least four consecutive weeks during the pandemic, to claim an amount of $2 per working day (up to a maximum deduction of $400). This simplified method does not require you to obtain a T2200/T2200S form or maintain documented receipts to validate your claim.
Please note that:

  • Working days include any day during which an employee performs work, at their home, for the employer. There are no minimum hours attached to this, both full-time and part-time employees may count any day on which they performed work for the employer.
  • Non-working days such as weekends, statutory holidays, vacation or sick days are not counted. (Flex days count as working days as we work extra hours in advance to have the time)

For most employees, this simplified method will provide the maximum deduction allowed without the detailed record-keeping normally required for home office deduction claims. 

To claim the simplified method, you must meet the eligibility criteria – Temporary flat rate method as posted on the CRA website. Once you have determined you are eligible, use “Option 1 – Temporary flat rate method” on Form T777S – Statement of Employment Expenses for Working at Home Due to COVID-19 – enter the days you worked (vacation/sick days/weekends don’t count as working days). You will attach the form to your 2020 income tax return. Please refer to the CRA website and these links for further information.

For employees that calculate their work from home expense deduction is greater than that provided under the simplified method, a T2200S form would be used instead. Some considerations for this method:

T2200S form can be requested and will be provided by the College. The T2200S form (“S” meaning “short”) is a new form created for the 2020 tax year and is applicable for Camosun College employees that have been required to work from home. Below are some illustrative examples that show the difference between an individual who is a homeowner and an individual that is renting their place of residence.

Please Note: Camosun College / CUPE 2081 does not provide tax advice. These examples are for informational purposes only, and are not intended to provide, and should not be relied on for, tax advice. You should consult your own tax advisor for professional advice on your individual circumstance.

Here is an illustration for a homeowner:

Sam is a homeowner who lives in a three bedroom townhome with other family members. He has worked from home continuously from March 15 to December 31, 2020.
The only space available to set up a work area was at the dining table and this space represents eight per cent of the total finished area of the home.
Sam works an average of 50 hours per week so the common space is further prorated by 29.76 per cent (50 hours divided by 168 hours per week) for a total claim amount of 2.38 per cent.
The eligible expenses Sam has for a detailed claim are the utilities and the internet access fee which total $3,250, 2.38 percent of this is $77.35.

Sam also has invoices for office supplies he paid for, totaling $125 which he can claim 100%.

Using a T2200/T2200S, Sam would only be able to claim $202.35.

If Sam worked from home for 190 days (weekends, statutory holidays and vacation have been excluded) a non-accountable deduction (using the simplified method described above) of $380 would provide a greater deduction.

The next illustration provides an example for those who rent their home:

Alexandra and her spouse rent a two bedroom apartment for $2,000 per month. They have both been working from home continuously from April 1 to December 31, 2020. Alexandra has set up her workspace in the couple’s bedroom while her spouse is working from the second bedroom that is usually used as the TV room. Alexandra’s space represents 11.25 per cent of the total finished area of the home and she normally works 40 hours per week, allowing her to claim 2.68 per cent of her share of the rent and home internet access.

Total rent and internet access fees are $18,600. Using the T2200/T2200S method, each spouse may only allocate 50 per cent or $9,300 to their claim and, at 2.68 per cent, this would limit each of their  claims to $249.24.

If Alexandra has worked from home for 180 days (weekends, statutory holidays and vacation have been excluded) a non-accountable deduction (using the simplified method described above) of $360 would provide a greater deduction.

If Alexandra and her spouse are eligible for similar claims that would be a household claim of $720 using the simplified claim as compared to a detailed claim of approximately $500.

You will be able to claim this amount on line 22900, Other Employment Expenses, of your 2020 tax return. This deduction will reduce your taxable income for the year, and will generally result in an income tax refund. However, the amount of the refund may be different based on your unique tax situation.

It is also important to understand the difference between a common workspace and a designated workspace, which is an area in your home that is only used for work. An existing home office that contains your personal documents or a spare bedroom containing personal effects is not a designated workspace. Most people required to work from home as a result of COVID-19 will be considered to be using a common or shared area in their home for work purposes.

When to request a T2200S form
Depending on your circumstances, you may be eligible for deductions greater than what the simplified method offers. This will require you to:

  • Measure and total the size of your workspace;
  • Obtain the total size of all finished areas in your home (including your workspace);
  • If using a common space in the home determine average weekly working hours; and
  • Collect and maintain supporting documents for all of the expenses you can claim for the period(s) you worked from home

To make a detailed claim, you will require a confirmation of employment form. Upon request, Camosun College may issue a T2200S form to validate your conditions of employment to allow you to make a detailed expense claim for your work at home space.
If choosing the detailed claim method, you are also required to complete and attach Form T777S (Statement of Employment Expenses For Working At Home During COVID-19) to your tax return to deduct home office expenses for the year.

The incrementally greater amount that you may be able to claim using a T2200S, may not be equal to your investment of time and effort.

Walter rents a one bedroom with a small den that was used for his personal computer use and to store household items. From April 1 through December 31, 2020, he also used this space for work. The den is considered a common space and, based on Walters working hours of 50 per week, he would be able to allocate 2 per cent of his rent and internet access fee as working from home expenses. Walter’s total expenses for a detailed claim requiring a T2200S are $20,750. Being able to allocate 2 per cent of that total, Walter is able to claim $415.00.
If Walter worked from home for 185 days the simplified calculation would result in a $370.00 claim.

Although the detailed claim provides an additional amount of $45, the additional tax savings, based on Walter’s net taxable income, is only $18 greater than the simplified method which requires no measurements or documented evidence of expenses.

Please note the T2200S form only validates the condition of employment requiring you to work from home because of the COVID-19 pandemic. It does not provide the value of your eligible deductions, as that is a personal tax matter. In the event of a CRA audit, you must be prepared to present valid proof (e.g. receipts, floorplans, rental contracts, etc.) of any deductions you have claimed. The CRA also occasionally performs in-person inspections of home office claims looking at, among other details, proof that the space is being used solely or jointly for working purposes.

Before requesting a T2200S form we suggest you use the tools that the CRA has created to assist you in estimating a detailed work from home expense claim. As with the examples we have provided you may find the simplified method provides the greater deduction.
The following tools are available from CRA:

  • A comprehensive list of eligible expenses; and
  • calculator to assist you in determining the eligible claim amount

After consideration of your individual work from home situation, if you determine you will require the T2200S please follow this link that will take you to the T2200S request form.  A completed T2200S form will be sent to your preferred email address indicated on the request form. Please note, you are not required to submit the T2200S form with your 2020 tax return but it must be kept in case the CRA requests to see it later.  Therefore, your patience is appreciated while the College processes your request.