Canadians who work from home can take advantage of a number of home office tax breaks. These breaks have traditionally applied to people who are self-employed or who run a small business out of their home as a sole proprietor or in a partnership. Due to the COVID-19 pandemic, the process for employees that have been working from home has been streamlined as well. Here’s a quick guide to claiming both kinds of expenses.

Claiming Home Office Expenses for Business Owners

To qualify for business use of home expenses as self-employed or a small business owner, you must meet one of two criteria: your office is either your primary place of business or your home office is used only for business income and to meet with clients on a regular and continuous basis.

For example, even if you work out of the home part-time, you can still claim home office deductions if you regularly meet clients at your home office.

Expenses that are eligible for deduction include almost any cost involved in maintaining a home office space. Some of the most common expenses that business owners deduct include:
• Mortgage interest
• Rent
• Property taxes
• Utilities
• Home/renter’s insurance
• Maintenance costs

You can also deduct your phone bill, internet bill, and office supplies. However, these expenses are simply deducted as regular business expenses rather than business-use-of-home expenses.

Remember that you cannot claim the full amount of all eligible expenses–only the percentage that goes directly towards your home office space. This means you need to calculate the size of your home office and figure out what percentage of your home it occupies. Then, calculate the correct proportion of each expense you wish to claim.

For example, if your home office space is about 15% of your home’s square footage and you paid $1,000 for home insurance last year, then you can claim a deduction of $150.

Claiming Home Office Expenses for Employees

Many employees shifted to working from home during the COVID-19 pandemic, and many are still working part-or full-time from their home office. There are two main ways that you can claim home office expenses as an employee: the temporary flat rate method and the detailed method.

The temporary flat rate method is more streamlined and allows you to claim a flat rate of two dollars a day up to $500 on your 2021 taxes. You are eligible if you worked from home more than 50% of the time for a period of four consecutive weeks or more.

The second method is more detailed and allows you to claim the total cost of all expenses incurred while working from home. However, you will need to provide further documentation from your employer that you were required to work from home and that you were responsible for paying some or all of your home office expenses.

This tax season, save yourself some stress and take advantage of all the savings you can get from having a home office. Whether you work from home as an employee or as your own boss, you can lower how much you owe by making sure you deduct everything you are entitled to.