From 2020 to 2022, the government made it easy to claim a credit for  working from home with a flat per-day rate. However, in 2023, claiming home office expenses has gone back to how it was pre-COVID. Here is what you need to know.

Calculating your work space 

For anyone claiming home office expenses, as an employee or a self-employed person, you need to determine whether you have a dedicated office space or a mixed use area, and the percentage of your home it represents.

Type of work space

For a dedicated work space

Measure the square footage of your work space, and divide it by the total square footage of your house. Include all finished parts of the hours, including bathrooms, hallways and the kitchen. Multiply that result by 100 to calculate the percentage of your home used as a work space.

For a mixed use or common area work space

Calculate the percentage of square footage of your work space, then multiply that percentage by the percentage of a work week the space is used as an office.

Let’s say you work 40 hours a week:

 40 hours (hours worked) divided by168 hours (total hours in a week) times100 (to convert into a percentage) equals 23.8% (percentage of time you can claim for the work space)

Number of workers in the home

One employee working in the home: If only one person in your home uses a work space, that person will claim the whole employment use of that work space.

Multiple employees working in the same home, with different work spaces: Each employee will calculate their employment use of the work space they are using.

Multiple employees working in the same home, sharing the same common area work space:

Each employee will calculate their employment use of the work space they are sharing.

Example: Multiple employees sharing a designated work space

Change of work space

If you use different work spaces in your home, or you move to a new property, you will need to claim the expenses you paid for each work space separately. This is due to changes in the size and type of the work space, or finished area of the home.

What you can claim (for salaried or commission employees)

Form T2200

If you are an employee wanting to claim home office expenses, your employer must sign a “Form T2200, Declaration of Conditions of Employment” and you need to keep receipts for all of the actual expenses.

What you can claim

All salaried and commission employees can claim a portion of:

• electricity
• heat
• water
• utilities portion (electricity, heat, and water) of condo fees
• home internet access fees
• maintenance and minor repair costs
• rent

Commission employees can also claim:

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

What cannot be claimed by employees

• mortgage payments – interest or principal
• home internet connection fees
• furniture
• capital expenses (replacing windows, flooring, furnace, etc)
• wall decorations

What you can claim (for self-employed people)

If you are self employed folks, you can deduct expenses for the business use of a workspace in your home, as long as you meet one of the following conditions:

• it is your principal place of business
• you use the space only to earn your business income, and you use it on a regular and ongoing basis to meet your clients, customers, or patients

Expenses you can claim

• electricity
• heat
• utilities
• home internet access fees
• maintenance and repair costs
• rent
• home insurance
• property taxes
• mortgage interest 

 

If you have any questions as you calculate your working from home expenses, feel free to reach out. Bird’s Eye Business Solutions provides tax filing services for individuals and small businesses. Find out more about our rates and book a free 15 minute consultation to discuss your needs.

 

Photo by Ketut Subiyanto.