Next year’s tax filing season just got a little less complicated for Canadians who found themselves working from home due to the COVID-19 pandemic.
One of the many announcements in Monday’s fiscal update was a work-from-home personal tax deduction of up to $400 for employees who have incurred “modest expenses” in 2020 due to remote working.
Here’s how that works, who it will benefit, and what else you need to know before next year’s tax season.
To qualify for the $400 deduction, you must have been working from home because of COVID-19, said Josée Cabral, a senior tax expert with H&R Block. This means the deduction won’t apply if you were already working from home when the pandemic hit, or if you were working from home for reasons other than the pandemic.
As well, the deduction is up to $400, depending on the amount of time you worked from home, she added.
This is the biggest announcement in the fiscal update from a personal tax point of view, said Cabral, noting that more details are expected in the coming weeks about the deduction.
Cabral said the word “reasonable” will be key when claiming work expenses — not only do you have to make sure you’re claiming eligible expenses like internet, you need to consider what percentage of each expense you can claim.
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