Work-From-Home Tax Deductions for 2023

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If you worked from home last year—even if only for part of the year—you may be able to lower your taxable income (i.e. pay less tax!) when you file your return this year. Here’s how to figure out if you’re eligible for the home-office expense deduction for employees, what expenses and amounts you can deduct, and how to claim these expenses on your tax return.

Who is Eligible for the Home-Office Expense Deduction for Employees?

You are eligible to deduct home-office expenses as an employee if you:

• Worked from home more than half of the time for at least four consecutive weeks during 2022; and
• Paid for eligible home-office expenses (e.g., rent, electricity, internet access) or office supplies (e.g., pens, paper, cell phone minutes) that you used to complete your work, and for which your employer has not reimbursed you.

How to Calculate the Home-Office Expense Deduction for Employees

There are two possible ways to calculate the home-office expense deduction for employees:

Temporary flat rate method

In 2020, the CRA introduced a temporary simplified calculation option for employees who worked from home (either by choice or because their employer asked them to) as a direct result of COVID-19.

With this approach, you claim a flat rate of $2 for every day you worked at home in 2022, up to a maximum of 250 days/$500. You do not need to collect or provide any receipts of your expenses, and there is no documentation required from your employer.

Detailed method

This option, which has been in place for many years, can be used by workers whose employers required them to work from home for any reason (not just because of the pandemic), is more complicated. You must add up all your eligible home-office expenses during the period you worked from home. Calculate the size of your workspace as a percentage of your home’s total livable space. If you don’t have a designated room that’s used solely for your work, you will also have to calculate the number of hours that you use your workspace for paid employment, as opposed to personal use.

To use the detailed method to calculate your claim you must:

• Obtain a completed and signed Form T2200S or Form T2200 from your employer that certifies that you were not reimbursed for the expenses you are claiming; and
• Keep all your receipts and supporting documents for the expenses you are claiming.

If all of this sounds confusing, check out the Canada Revenue Agency’s home-office expense calculator, which walks you through all the number-crunching in a few clicks. It’s also a good idea to use CRA-certified tax software such as TurboTax to prepare and file your tax return online since it will not only help you claim this deduction but also automatically searches for more than 400 available credits and deductions to help you maximize your tax savings overall.

Temporary Flat Rate Method vs. Detailed Method

What Expenses Can I Include in the Detailed Method Calculation?

Under this deduction, all eligible employees—whether salaried or paid on commission—can claim the following workspace-in-the-home expenses:

• electricity
• heat
• water
• a portion of condo fees for utilities (electricity, heat, and water)
• home internet access (not including connection fees or rental costs for modem/router)
• maintenance and minor repairs
• rent

Eligible employees who are paid on commission can also claim the following additional expenses:

• home insurance
• property taxes
• lease of a cell phone, computer, laptop, tablet, fax machine, etc. that reasonably relate to earning commission income

Note that mortgage fees (both the interest and principal) are not eligible expenses. Neither are furniture, home renovations, or décor.

If you had to pay out-of-pocket for consumable office supplies, such as sticky notes, notebooks, printer paper/ink, envelopes, file folders, pens, highlighters, paper clips, and postage stamps, you may be able to claim them as well. You’ll find a complete list of eligible supplies for salaried and/or commissioned employees on the CRA’s website.

Finally, if you had to pay for a mobile phone for work, you can deduct the basic service plan (minutes/data) if the cost is reasonable and you can show the minutes/data used for employment vs. personal use.

How to Claim the Deduction

If you were required (or chose) to work from home because of the pandemic, fill out Form T777S – Statement of Employment Expenses for Working at Home Due to COVID-19. (Complete “Option 1” if you’re using the temporary flat rate method to calculate your claim, or “Option 2” if you’re using the detailed method to calculate your claim.)

If you were required to work from home for any other reason, fill out Form T777 – Statement of Employment Expenses.

Whichever form you use, file it with your 2022 income tax return. You do not need to send in receipts or other documentation. However, if you are using the detailed method, you must retain the completed and signed Form T2200S or T2200 from your employer and all expense receipts and other supporting documents for six years, as the CRA can ask to see these records at any time.

Or the easy way is to use tax filing software like TurboTax. All you have to do is complete a step-by-step online questionnaire and it automatically searches 400+ credits and deductions to find tax-saving opportunities — including those for COVID-19. However, if you need a bit of hand-holding during the process, you can upgrade to TurboTax Live. With this extra service, you have two choices: opt for TurboTax Assist and Review to get unlimited tax advice as you complete your taxes, plus a final review before you file. Or for “the works,” go for TurboTax Full Service and have a tax expert prepare your return, optimize it for credits and deductions, and file it on your behalf. Also, TurboTax has launched a COVID-19 info centre, offering a one-stop shop to answer your burning questions about claiming benefits and deductions during this strange tax year. Read our full TurboTax review.

FAQ

I haven’t tracked my expenses or kept receipts. Can I still claim the deduction as an eligible employee?

If you worked at home due to COVID-19, you can still claim the deduction. Just be sure to use the temporary flat rate method (Option 1 on Form T777S - Statement of Employment Expenses for Working at Home Due to COVID-19) to calculate your claim. Unfortunately, if you worked at home for any other reason, you cannot claim without proper receipts, as well as a completed and signed Form 2200S or 2200 from your employer.

I have expense receipts and a signed Form T220/Form T220S from my employer. Should I use the flat rate method or detailed method to calculate my claim?

If the reason you worked from home was not directly related to COVID-19—for example, if your employer required you to work from home even before the pandemic began—you must use the detailed method to calculate your claim. If, however, the reason you worked at home is COVID-related, you’ll want to use whichever method provides the larger deduction. The CRA’s home-office expense calculator will help you determine which method will offer the largest deduction.

My spouse and I both worked from home in 2021, and we both met the eligibility criteria. Can we both claim the deduction?

Yes! Spouses, roommates, or any other employed workers you live with who meet the eligibility criteria can claim this deduction. Note that if you shared a workspace (e.g., two desks in one designated room, or two computers at the dining room table) and you are using the detailed method to calculate your claims, you will have to divide the size of the space in half when you crunch the numbers. If you’re using the temporary flat rate method, however, your claim calculations will not be affected.

I am self-employed. Can I deduct home-office expenses?

Yes, but there is a separate claim process for eligible self-employed individuals, who must complete Form T2125 – Business-use-of-home expenses. In fact, there are many other business deductions you can claim when you’re self-employed, so consider using TurboTax Self-Employed, which will guide you through the process to make sure you don’t miss any tax savings. It’s the only software in Canada designed specifically for those with self-employed income.

Last Word

If you are an employee who worked from home in 2022 due to COVID-19, and you did so for more than half of your regular work hours/days for at least four consecutive weeks, you should definitely claim the home-office expense deduction for employees. You don’t need receipts or any other supporting documents if you’re using the temporary flat rate method to calculate your claim, and it can reduce your annual taxable income by as much as $500.

If you have a much larger claim than the flat rate calculation will provide, you can use the detailed method—so long as you have receipts and the appropriate signed documentation from your employer.

Similarly, if you were required by your employer to work from home for reasons outside the pandemic and you meet the eligibility criteria, you should use the detailed method to calculate your claim.

Regardless of your WFH situation, using quality software such as TurboTax to prepare your tax return is a smart choice, since it automatically finds tax-saving opportunities that apply to you by searching 400+ credits and deductions. Plus, if taxes seem a little much this year, TurboTax Live has tax experts that can help you every step of the way. They can walk you through the tax-filing process as you complete your taxes on TurboTax software, or you can completely hand off your taxes to their experts who will file your taxes from start to finish. Then all you’ll have to worry about is how to spend your tax refund.