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Tax considerations for those who worked from home in 2020

byline M. Feltham, Chief Steward Local 110

First, I offer the obligatory disclaimer: never take tax advice from an English professor! Opening jests aside, however, I’m not qualified to give tax advice, so what follows is meant more as a story of my own journey through the weird and not-so-wonderful world of COVID and its income-tax implications for 2020. Tax advice, moreover, must fit individual circumstances, so you should all consult with a professional tax preparer of some kind before making any decisions based on anything you read online, including my words here.

Now that that’s out of the way, I’ll tell you my story.

Like most of you, I started working from home in mid-March of last year and quickly began to incur expenses as a result. My hydro bill went up, my internet usage increased, and I started using my own office supplies to do 100% of my college work. Although I’m no tax expert, I am interested in the rules around taxes, especially as they affect my bank account, so I started to read about the tax implications of working from home. There were plenty of them.

Most of you have probably heard of the magical T2200 form, also known as the “Declaration of Conditions of Employment.” I first heard of this form many years ago at a different employer, and quickly learned that employers are sometimes reluctant to give these out. However, I immediately asked our HR contacts whether Fanshawe planned to issue these forms as a result of COVID. Conversations about this began last summer, and continued through the fall; meanwhile, the Government of Canada was making its own plan for dealing the influx of questions regarding this matter. Here’s where it all landed: CRA announced a new form, the T2200S (“S” for “Special,” I believe), and Fanshawe announced that it would issue these forms on request.

To request a T2200S, email payrollhr@fanshawec.ca to request the form.

The other piece you’ve probably heard about is the $400.00 that people can claim. To paraphrase Bob Dylan, the first the thing I should tell you about the $400.00 is that it isn’t actually $400.00—not for us, in most if not all cases. It’s actually a maximum of 400.00, based on $2.00 per day for each day worked from home. Because of when our COVID work-from-home period started and because of our 43-day vacations, college professors generally won’t have enough days worked from home to hit the maximum.

The big question people tend to ask is this: should I use the simplified method or the more detailed method with the T2200S form? The short answer is, it depends. The longer version is below, where I suggest some questions you’ll want to ask yourself and your tax professional.

The 2.00/day amount, I’m told, requires no proof in terms of receipts and so on. The T2200S method does require proof but potentially allows you to claim more: a fraction of your rent, hydro, internet, and so on. I’ve read that you can claim rent if you rent but not mortgage payments if you own, so that’s a consideration.

Here are some questions you’ll need to ask:

  • Am I better off with the per-day method or the T2200S?
  • If I can claim rent or other home expenses (hydro, etc), what percentage can I claim?
    • Note that this is usually based on the percentage of square footage of your home workspace. For example, I’m a renter, and I have a dedicated home office that’s about 20% of my square footage, so that’s the information I’m giving to my tax professional.
  • What expenses are eligible, and can I claim them in whole or in part?
    • For example, with my internet service, what percentage is work and what percentage is personal?
  • Do I have receipts for all eligible expenses in case CRA wants to see them?

Again, though, don’t just take my word for any of this: please do your own research. I’ve included a few links below to help you get started (all to Government of Canada Pages) but in the end, it’s your signature on the tax return, so please check with an expert before you file your return for 2020!

Government of Canada Employment Expenses 2020:

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4044/employment-expenses.html

Government of Canada Home-Office Expenses Page:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-229-other-employment-expenses/work-space-home-expenses/frequently-asked-questions.html

Government of Canada T2200S Page:

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2200s.html