Working from home and home office expenses

Employees that incur employment expenses that are not reimbursed by their employer may be able to claim a deduction on their return for such items. In years prior to the pandemic, this required that employees obtain Form T2200, Declaration of Conditions of Employment, from their employer. Simplified procedures were introduced  in 2020 that could still apply, allowing individuals to claim home office expenses for the 2022 tax year.

In order to deduct home office expenses, one stipulation is generally that an employee is required by their employer to maintain a home office. The Canada Revenue Agency (CRA) has previously confirmed that maintaining a home office does not need to be a condition of employment due to the COVID-19 pandemic.  For 2022 you can still make claims in the Employment Expenses section on forms T777 or T777S, under the same rules introduced in 2020. This means that even an employee that has chosen to work from home because of the pandemic will be eligible to claim home office expenses if they worked more than 50% of the time from home for at least four consecutive weeks.

How to determine your home office expense deduction

Employees may choose one of two methods to claim home office expenses: 

It is important to note that individuals can only claim the portion of expenses that can be reasonably allocated to employment use. The CRA has issued a simplified form (T777S, Statement of Employment Expenses for Working at Home Due to COVID‑19) for calculating home office expenses in 2022, which employees must complete and submit with their 2022 personal income tax return, whether using the temporary flat rate or detailed method. The CRA’s website also offers a tool to help determine eligible expenses for 2022.

Detailed method - what can be claimed? 

If you choose the detailed method, you may also make claims for certain other expenses incurred. Employees who worked at home in 2022 due to COVID-19 and meet certain conditions may be eligible to deduct home office expenses such as home workspace, office supplies and other expenses such as employment use of a cell phone and long-distance calls for employment purposes. 

There are many rules and provisions when determining which expenses are available to claim, differences for salaried employees versus employees earning commissions, as well as what amount of the expenses can be claimed proportionate to business versus personal use. As these details are extensive and numerous, you are strongly encouraged to discuss your situation with your tax professional and review the details provided by CRA here. 

Some common home workspace expenses include:  

• Rent paid for a house or apartment where you live;
• Electricity, heat, water or the utilities portion of your condominium fees;
• Home internet access fees; and
• Maintenance (minor repairs, cleaning supplies, light bulbs, paint, etc.).

If you are a commission employee, you can also claim expenses that reasonably relate to earning commission income for the following:

• Property taxes;
• Home insurance; and
• Lease of a cell phone, computer, laptop, tablet, fax machine, etc. 

You cannot claim any of the following: 

• Capital cost allowance;
• Mortgage interest;
• Principal mortgage payments;
• Home internet connection fees or the portion of fees related to the lease of a modem/router;
• Capital expenses (replacing windows, flooring, furnace, etc.);
• Office equipment (printer, fax machine, briefcase, laptop case, or bag, calculator, etc.);
• Monthly basic rate for a landline telephone;
• Cell phone connection, or license fees;
• Purchase of a cell phone, computer, laptop, tablet, fax machine, etc.;
• Computer accessories, (monitor, mouse, keyboard headset, microphone, speakers, webcam, router, etc.);
• Other electronics (television, smart speaker, voice assistant, etc.);
• Furniture (desk, chair, etc.)

As a final note, regardless of the amount of expenses you may be able to tally, only expenses up to the amount of employment income remaining after all other employment expenses have been deducted can be claimed. Meaning that you cannot use expenses to incur a loss or negative income.

For further information on other personal tax topics for the 2022 tax filing season, you may be interested in the following article: Understanding your personal taxes in Alberta.