Don’t leave money “on the table”

You’ve had the pleasure and happiness, once again, of being able to work from home in 2020. “Congratulations!”, however, your employer can’t wait to see you back in the office. As they say in French : “Bon voyage et bye bye”.  Nevertheless, you’ll be sipping that latte next to your boss in no time. Sorry, trying to bring a little sense of humour here …

Last year I wrote a column entitled: the impacts of teleworking on your taxes. This was a collaboration with Brigitte Alepin and UQO’s accounting department. The column was published in the newspaper Acces du Nord. Small regional newspaper outside of Montreal. 

The question I was asking myself, what should you do this year with your office expenses? According to our tax law, there are two options: the detailed method and the new simplified method.

The detailed method will potentially allow you to put more “cash” in your pockets. There are conditions to be met. First, you must have worked from home more than 50% of the time for a period of at least four consecutive weeks. Second, you must have completed and signed a form called T2200S (or Form T2200). Equivalent forms must be used for Quebec tax purposes.

I encourage you to have a closer look at the detailed method, as you will be able to deduct a variety of expenses. Examples include the cost of rent, electricity, heating, internet and water. In addition, maintenance and minor repair costs may be accepted. Employees, unlike the self-employed individuals, have far fewer options when it comes to deducting expenses. Unfortunately, you can’t deduct your “Lazy boy” as well as your 60-inch flat screen TV !

The other method is the simplified method. Indeed, it will save you time and you do not have to follow and keep supporting documents . However, be aware that if you chose the simplified method, you may be leaving money “on the table.”

Under the simplified method, you can claim $2 for each day, up to a maximum of $400 (i.e. $2 per day for up to 200 business days) per person.

Interestingly, unless working from home has “pushed you to divorce,” a couple in the same household can use the simplified method individually. Therefore, you can claim $400 per person.

Take your time, gather your receipts, and ask your employer for the T2200S. Qualify and quantify which method is more appropriate and make a choice. Generally speaking, for most people living in a city, the detailed method will save you more money this year.