The rules for tax deductions for telework have changed. This is what you should know for your 2023 tax return.
In recent years, due to COVID-19, tax authorities have provided taxpayers with tax deductions for teleworking from home in a simplified manner. As the name suggests, implementation was easy and you could claim a deduction of $2 per day for a maximum of $500 in expenses per year.
For the 2023 tax year, this method has been abolished and we must therefore revert to the detailed method that already existed before and during the pandemic. Yannick Lemay, tax expert and spokesperson for H&R Block, points out that in order to benefit from this deduction, you must respect certain criteria and meet the following conditions.
More than 50% of the time or an office dedicated solely to work.
To be eligible, you must work at home more than 50% of the time. “If you do not meet this criterion, you may also be eligible as long as you have a home office used solely for the purpose of earning employment income and for regular and ongoing meetings with customers and people other than suppliers.” “You are at “exercising their duties within the normal framework,” explains Yannick Lemay.
Forms to be completed by the employer
The detailed application method also requires the employer to complete and provide Forms TP-64.3 at the provincial level and T2200 at the federal level to its employees who telework. “With these forms, the employer acknowledges that his employee is teleworking. It will also be possible to indicate whether the employee had to pay for certain things necessary for his work, such as office supplies, printer ink, etc.,” explains the tax specialist.
In fact, only expenses actually incurred by the employee and not reimbursed by the employer can be claimed under the deduction.
Calculate the effort share
It is possible to claim the deduction for various types of expenses, provided they have not been reimbursed by the company, such as: B. Ink cartridges, telephone costs, office supplies, etc. You can also add part of the electricity and telecommunications bill. However, it is necessary to calculate the proportion that actually goes to work, based on the proportion of space used or in proportion to the hours spent in a room in the house if you do not have a dedicated office for this use . Tenants can also deduct a portion of their rent and owners can deduct a portion of their condo fees. Be careful in the latter case, you cannot claim amounts intended for the emergency fund or self-insurance, but only those related to the use of the apartment, for example heating costs.
For the Internet, costs for connecting to the network and renting a modem or router are not eligible. Only a reasonable portion of the subscription costs can be claimed, taking into account the use of the work.
Does your spouse also work from home? You cannot claim the entire amount, but must divide it among yourself.
A deduction, not a credit!
Yannick Lemay points out that this is a deduction and not a credit. “This means that net income and taxable income decrease. It should not be confused with a credit that can reduce the tax burden. The positive point is that a lower net income can give us access to certain loans and allowances calculated on this basis,” he says.
ADVICE
- A literal mention of telework in the employment contract is not necessary. A simple written or oral agreement is deemed to be valid for the tax office.
- Many employers send forms TP-64.3 and T2200 to their employees at the same time as T4 forms, but this is not done systematically. Request it if you haven't received it.
- Keep all of your receipts as it is not uncommon for the IRS to conduct audits. Be careful, bills can fade over time. It would be in your best interest to scan or photograph them.
- If you work on commission, note that you can also deduct additional expenses such as part of home insurance, property taxes, rent of a cell phone, fax machine, computer, etc.