Home Office Deductions for Employees and Self-Employed Workers
With more people working from home than ever before, the question of home office expense deductions has become a hot topic.
You're in the right place if you’re unsure whether you qualify to claim home office expenses on your tax return. Whether you’re an employee working remotely or a self-employed individual running your business from home, this blog post will help you determine if you’re eligible and outline the key rules you need to know.
Keep reading to learn more about home office deductions and how our new tools can save you time and stress during tax season.
Who is Eligible to claim Home Office Expenses?
When it comes to home office expenses, the Canada Revenue Agency (CRA) allows two main types of individuals to claim deductions:
Employees Who Work From Home: If you’re an employee and your employer requires you to work from home, you may be able to claim home office expenses. This includes employees who worked from home due to the COVID-19 pandemic or because their job has permanently shifted to remote work.
Self-Employed Individuals: If you’re self-employed and use a portion of your home as your primary workspace, you can claim home office expenses to reduce your taxable income.
The eligibility criteria differ slightly for each group, and it’s important to know the distinctions. Let’s break it down.
Home Office Expense Deductions for Employees
If you’re an employee working from home, the CRA has specific rules regarding home office expense claims. You must meet all of the following conditions to qualify:
You worked from home at least 50% of the time for a minimum of four consecutive weeks during the tax year.
Your employer required you to work from home due to operational needs or other reasons. This requirement must be documented in a T2200 or T2200S form, signed by your employer.
You paid for your own home office expenses, which include costs like electricity, heating, and internet but exclude capital expenses like furniture or renovations. If your employer reimburses you for home office expenses, you are not eligible to deduct them as well.
Temporary Flat Rate Method
If you worked from home due to COVID-19 or other short-term circumstances, you can use the CRA’s simplified Temporary Flat Rate Method. This method uses a simple equation of $2 multiplied by the number of days you worked from home to a maximum of $500. However, this method was discontinued for all tax years post 2023.
Detailed Method
For employees who incurred more substantial home office expenses, the Detailed Method allows you to claim a portion of your actual costs. To use this method, you’ll need to calculate the percentage of your home used for work purposes. For example, if your home office takes up 5% of your home’s total square footage, you can claim 5% of eligible expenses like utilities and rent.
This is where our Home Office Workbook for Employees comes in handy. It breaks down the CRA’s guidelines and offers a step-by-step process for calculating your deductible expenses. Please remember to verify all calculations using the information found on the CRA website, which outlines the items you can and can’t claim.
Home Office Expense Deductions for the Self-Employed
If you’re self-employed and work from home, you also have the opportunity to claim home office expenses, but the rules are a bit different than those for employees.
To be eligible, you must meet one of the the following criteria:
Your home is your principal place of business, or you use a designated space in your home exclusively to earn business income and regularly meet with clients or customers there.
You must use the space exclusively for business purposes on a consistent basis, and you paid for the expenses purchased for it.
What Can Self-Employed Individuals Deduct?
As a self-employed individual, the list of deductible home office expenses is broader than for employees. Below are some expenses you can claim a percentage of:
Utilities (electricity, heat, water)
Internet
Maintenance and repairs
Rent (if you rent your home)
Property taxes
Mortgage interest
Home Insurance
Like employees, you’ll need to calculate the percentage of your home used for business. If your home office takes up 10% of your home, you can claim 10% of the relevant expenses. Be careful to exclude personal-use areas from your calculation to comply with CRA rules. (Our workbooks walk you through this piece as well!)
Our Home Office Workbook for the Self-Employed is designed to help you track these expenses throughout the year. You can track your eligible expenses throughout the year and the workbook will calculate your total deductible amount at the end of the year. It’s an incredible tool for freelancers and other self-employed individuals who want to stay organized and maximize all tax deductions.
IMPORTANT DISCLAIMER: Double-Check Your Calculations
While these workbooks are designed to make your life easier, it’s important to note that they are intended as tools for guidance only. We recommend that you cross-reference your calculations with the official CRA guidelines, which are available on the CRA website (we’ll include links in the workbook). Please be aware that we are not responsible for any filings made based on the information provided in the workbook.
If you’re unsure about any part of the process, it’s always a good idea to consult a tax professional or use the CRA’s online calculator to verify your deductions.
Why Use Our Home Office Expense Workbooks?
Our workbooks are designed with simplicity and functionality in mind.
Whether you’re an employee or a self-employed individual, these tools will:
Break down the CRA guidelines in plain language so you know exactly what you can claim.
Help you track your expenses month by month, so you’re not scrambling at tax time to gather receipts and calculate totals.
Provide links to the relevant CRA resources, including calculators and official guidelines.
Keep you organized year-round with easy-to-use worksheets that make it simple to update your information as you incur expenses.
These workbooks are particularly valuable for individuals who may already be familiar with claiming home office expenses but want a more efficient way to stay on top of their finances. When you have everything in one place tax season becomes easier, saving you time and minimizing risk and errors.
Conclusion
Whether you’re an employee working from home or a self-employed individual running your business from your living room, you may be eligible to claim home office expenses and reduce your taxable income.
Understanding the rules around eligibility is the first step! Here are some tools to help you take full advantage of these deductions:
Employee WFH Deduction Workbook - Excel Version
Employee WFH Deduction Workbook - Google Sheets Version
Self-Employed WFH Deduction Workbook - Excel Version
Self-Employed WFH Deduction Workbook - Google Sheets Version
Don’t leave money on the table. Take control of your home office deductions today, and make the most of the workspaces that help you do what you do best.
Still have questions and/or need support? Click here to reach out!
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