Tax Tip Thursday
EMPLOYEE Home Office Expenses
This is specific to Employees who have home office expenses!
Last week we discussed the COVID flat-rate method and the detailed method. What we didn’t mention was the standard employee home office expense deduction that existed prior to COVID.
Quick Recap
There’s a pair of forms: the T2200 and the T2200S.
The T2200S is the new version of the T2200 used for COVID if you were not claiming any other employment expenses.
The T2200 is if you have other employment expenses, for example for your car (the most common).
What can you claim?
All salaried employees can claim:
- electricity
- heat
- water
- the utilities portion of your condominium fees
- home internet access fees
- maintenance and minor repair costs
- rent paid for a house or apartment where you live
Commission employees can also claim:
- home insurance
- property taxes
- lease of a cell phone, computer, laptop, fax machine, etc. that reasonably relates to earning commission income
What can’t you claim?
Before the temporary flat rate method was introduced, the detailed method was the usual way in which employees claimed home office expenses. Due to COVID-19, eligibility for this method has been broadened for the 2020, 2021, and 2022 tax years.
Salaried and commission employees cannot claim:
- mortgage interest
- principal mortgage payments
- home internet connection fees
- furniture
- capital expenses (replacing windows, flooring, furnace, etc.)
- wall decorations
Some other things to know
Office supplies and phone expenses
If your employer requires you to pay for office supplies or certain phone expenses, you may be able to claim them.
Home Internet
- You can claim monthly home internet access fee (the cost of the plan must be reasonable)
- You cannot claim connection fees
- You cannot claim the portion of fees related to the lease of a modem/router
Maintenance and Minor Repairs
Maintenance and minor repair costs generally fall into one of the following categories:
- Expenses paid that relate to the workspace as well as other areas of the home
- You can claim the percentage of those expenses that relate to the workspace.
- Example: Minor repairs of the home furnace or air conditioner or purchase of household cleaning products
- Expenses related to the workspace only
- You can claim the total amount of the expenses if the amount paid is reasonable.
- Example: Purchase of light bulbs, repainting the workspace, or repairing the walls or ceilings after the installation of phones, fax machines, or other office equipment used in the workspace
- Expenses related to a part of the house that you do not use as a workspace
- You cannot claim any part of these expenses.
- Example: Repainting a bedroom that is not used for work
Rent for a house or apartment where you live
- If you rent your home, you can claim a reasonable portion of the rent related to the workspace.
- If you own your home, you cannot claim the rental value of the workspace in your home.
Capital Expenses
You cannot claim the renovations and expenses that extend the useful life of a property or improve it beyond its original condition.
How do I know for sure what I can claim?
All of the expenses above are based on the size of your office compared to the size of your house.
The easiest way to make sure you get this right the first time and keep as much of your money as possible is to call us! As a client of the Mad Accountant, we provide you with worksheets that lay all this out for you and gives you an easy and convenient way to add up all your expenses. We take care of the rest!
Disclaimer:
This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.