Understanding Home Office Expenses for 2022

The pandemic has also made working from home for many Canadians a necessity. It has also introduced the idea of working from home even past the pandemic as a more preferable option for some people. The Canadian government recognizes the impact COVID-19 has had and introduced some changes for the 2021 and 2022 tax years. This article will go over what you can claim, who is eligible and more. Also, the Canadian government and the Canadian Revenue Agency (CRA) have put into place some changes to how to claim home office expenses. These are currently in place for the 2021 and 2022 tax years. We will also go over how to use the calculator provided by the CRA.

Changes for the 2021 and 2022 tax years

The Government of Canada has announced a temporary flat-rate claim method. This method of claiming home office expenses is for the 2021 and 2022 tax years. This means on your 2021 taxes you can use either this temporary method or you can use the detailed method.

What is it?

This new method is temporary for these tax years. They created this method to be easier to calculate and also doesn’t require your employer to complete a T2200 form. For this method, you can claim $2 for every day you worked from home. The most you can claim for the 2021 year is $500. This is an increase from the 2020 year which the limit was $400. This means if you worked at home for 250 days you can claim the maximum of $500.

Who is eligible?

To figure out if you qualify for this method, you need to meet these criteria:

• Worked from home because of COVID-19.
  • This could be because you had to work from home or you chose to work from home.
• Over half of your working time was from home over a period of four consecutive weeks.
• You aren’t claiming any other employment expenses.
• You didn’t get reimbursed for your home office expenses by your employer.
  • If you did get reimbursed but only partially, you can still use this claiming method.

The detailed claim method

Compared to the temporary claim method, the detailed claim method does not have a fixed-rate method of calculating what you can claim. Instead, this method uses how many hours you work per week and how much of your residence you use for work.

How do you calculate how much you can claim?

Calculating how much you can claim is by using a combination of two things. How much of your home you dedicate to your work and how many hours you work per week. You can do this by calculating the area of the room you work in. This could be a living room, bedroom, or office. If you use your room for other purposes, then it is a common room. If you only use the room for work then it is a designated room.

You also need to calculate how much you use this room for work. If the room is a designated room, this is not necessary. But, if the room is a common room, you use the amount of time you work in the room per week in this calculation. Basically, if you work 40 hours out of the 168 hours in a week, then you use the room for 23.8% of the week.

The complete calculation would then be the percentage of your home that you use for work, multiplied by the hour per week percentage. This new percentage is then multiplied by how much you spend on rent, utilities and other expenses to determine how much to claim.

Who is eligible?

This eligibility has also changed a bit due to the COVID-19 pandemic. You need to meet the following criteria:

• Worked from home due to the pandemic.
  • This can either be by choice or required by your employer.
• You paid expenses for your home.
  • This includes utilities, internet, rent but does not include mortgage interest or principal payments. The expenses page on the CRA website has more information.
• Either you worked for over 50% of the time for at least four consecutive weeks. Or you use an area in your home for employment income and also have to use it to meet people related to your work.
• You use what you claim for your work directly.
• You have gotten a completed and signed T2200S or T2200 form from your employer.

Which method should you use?

If you are able to get a T2200S or T2200 form from your employer and you spent the majority of your time working from home, the detailed method may be beneficial to use over the temporary flat rate. But, there are also other variables to know if it is worth it. Such as if the area you are claiming is a large enough percentage of your residence. Or your expenses such as rent and utilities are high enough. We recommend using the calculator provided by the CRA to know if it is worth using the detailed method.

Using the calculator

The CRA has provided a calculator you can use to figure out how much you can claim based on your situation. You can choose whether you are using the new temporary rate or the detailed claim method. The temporary rate will just ask how many days you worked at home during the year.

The detailed method will first ask if the area you are claiming is a common or dedicated space. Then it will ask you for the square footage (or square meters) of the area you are claiming and your residence. This will calculate the percentage of the room you can use. If you are using a common room, it will ask how many hours per week you worked from home. It will then ask for various expenses such as rent, utilities, work-related expenses and more. Then, it will then ask for your income and contributions you made to pension plans, unions, etc.

It will then calculate how much you can claim. If this number is less than double the number of hours you worked from home then it is not worth using the detailed claim method. Use the temporary flat rate instead.