If you have worked from home during 2021 and been issued a T2200 from your employer, you may be in luck, it could increase your 2021 tax refund quite substantially!
What is a T2200?
A T2200 is a form that Canadian employers fill out which allows you to claim employment related expenses on your tax return. The most common reason an employer would fill out a T2200 is because an employee has been required to carry out their employment duties from a home office. Employers are not obliged to fill out a T2200, so if you have worked from home and have not received a T2200 it may be worth asking your employer’s payroll department to fill one out for you.
What does a T2200 mean for your 2021 tax return?
If you have received a T2200 on which your employer has stated that you were required to work from a home office you will be able to claim the following expenses on your tax return:
- Home internet access fees
- Minor home repair and maintenance costs
- Rent paid for your home
- Home insurance (Commission employees only)
- Property taxes (Commission employees only)
- Office supplies (Pens, paper, ink cartridges, general stationary)
How does this improve your 2021 tax refund amount?
When you claim expenses on your tax return, they reduce your taxable income, thereby reducing the amount of tax owed on your income, which will either improve your entitled refund amount or reduce a balance owing to CRA (Canada Revenue Agency).
How do you claim the expenses on your tax return?
You will be required to declare all eligible expenses incurred during the 2021 tax year. You will also need to declare the percentage of your home which makes up your home office. If you incurred $10,000 in home office expenses, and used 10% of your home as your office, this will provide you with a $10,000 x 10% = $1,000 home office deduction on your tax return.
What will be better for my tax refund? The simplified flat rate method or the detailed method?
You can see from the above example how it is possible to be entitled to a $1,000 deduction on your tax return, this is higher than the maximum $500 deduction claim when using the simplified deduction method. For those who worked from home for the full 12 months of 2021 it is quite easy to incur over $10,000 in apartment rental costs alone (especially in Vancouver and other large Canadian cities), so those who are renting are usually entitled to a larger deduction when using the T2200 detailed claim method, than the simplified method.
Do you have any questions about your 2021 tax return?
If you have any tax related questions at all, please do not hesitate to contact the team at email@example.com or visit our Vancouver office*. We will be happy to assist you become more knowledgeable about your deduction eligibility and to claim the detailed home office deduction through a T2200 on your 2021 tax return if you wish to use our services. We will also be able to advise on any other deductions or tax credits that may be applicable to your tax situation. Tax doesn’t have to be taxing!
*At the time of this posting our Vancouver office is not open for visits due to COVID-19. Please reach our team via email – firstname.lastname@example.org