COVID-19 has changed the work landscape for a lot of Quebecers and if you are an employee who teleworked in 2020 because of COVID-19, you may be able to claim a deduction for employment expenses using two new temporary deduction methods, if you meet the following conditions:
• You paid your own expenses;
• You worked from home over 50% of the time for at least four consecutive weeks; and
• Your employer did not reimburse you for the expenses.
Both the Federal and Quebec governments will be temporarily offering remote workers one of the following two methods to claim a deduction for employment expenses for 2020: • The temporary fixed rate method; or • The detailed method.
For Quebec tax purposes, under the fixed rate method, a simplified flat-rate deduction may be claimed of $2/day worked at home, for a maximum of $400 for the year. Alternatively, under the detailed method, the taxpayer is given the option to claim employment expenses using a more detailed approach that requires the employer filling out a TP-64.3-V—General Employment Conditions form. To clarify which option is available and would work best for you, check-out the Revenu Quebec website, FAQ section, under Employment Expenses Related to Teleworking.
FEDERAL TAX DEDUCTIONS
Similarly, the Federal government also offers eligible employees a deduction for their home office expenses using a temporary flat-rate method, if conditions are met. This simplified method allows taxpayers a deduction of $2/day worked at home, for a maximum of $400 for the year. Alternatively, you may choose to use the detailed method, which would allow for the deduction of actual expenses. Under the detailed method, employers can provide a special short Form T2200S — Declaration of Conditions of Employment for Working at Home Due to COVID-19. This form must be signed by the employer and does not need to be included in the taxpayer’s tax return, but will need to be kept on file. To clarify which option would work best for you, check-out the CRA website, FAQ — Home office expenses for employees.
ELIGIBLE HOME OFFICE EXPENSES
It is important to keep in mind that under the detailed method receipts are required. Employees claim the employment portion of the actual eligible home office expenses paid. As such, eligible home office expenses may include the following outlays:
• Your rent related to your designated home office space
• Heating, electricity, water, cleaning products, light bulbs and minor repairs
• Internet service access fees
However, if you own your own home, the following are NOT considered deductible expenses under the detailed method:
• Property taxes*;
• Home insurance premiums *; and
• Mortgage interest.
*There is an exception if you are a commission employee.
If your employer requires you to pay for office supplies or certain phone expenses, you may also be able to claim those expenses, for example:
• Cellphone minute fees
• Work-related long-distance calls
• Office supplies, including pens/pencils, paper, ink cartridges, paperclips, envelopes and staples
• Postage fees
For employees who have additional expenses because they are working from home generally (i.e., before the pandemic hit), such as travel expenses, motor vehicle expenses, or other costs, then the regular federal form T2200 — Declaration of Conditions of Employment is required.
Finally, the CRA requires an employer to have an authorized person sign the T2200S or T2200. The same rule applies for Quebec form TP-64.3s-V. Both the federal and Quebec governments will accept electronic signatures on these forms for 2020 taxation year.
To discuss these changes or obtain more information on what deductions are available to you, contact your SLF tax adviser.