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Remote work: The rules for tax deductions have changed

Remote work: The rules for tax deductions have changed

The rules for getting tax deductions for remote work have changed. Here's what you should know about your 2023 tax return.

In recent years, due to the Coronavirus (COVID-19), tax authorities have given taxpayers tax deductions for working from home, using a simplified method. As the name suggests, it was easy to implement and you could claim a $2 deduction per day up to a maximum of $500 in expenses per year.

For the 2023 tax year, this method has been removed, and we must therefore revert to the detailed method, which was already in place before and during the pandemic. Yannick Lemay, tax expert and spokesperson for H&R Block, points out that to benefit from this discount, you must respect certain criteria and meet the following conditions.

More than 50% of the time, or an office dedicated to work.

To be eligible, you must work more than 50% of the time at home. “If you do not meet this criterion, you may also be eligible as long as you have a home office that is used solely to earn business income and meet with clients and other people, as suppliers, on a regular and ongoing basis in the ‘normal course of carrying out their duties,’” specifies Yannick Lemay.

Forms that must be filled out by the employer

The itemized claim method also requires the employer to complete and submit Forms TP-64.3 at the provincial level and T2200 at the federal level for its telework employees. “With these forms, the employer is aware that his employee is working remotely. It will also be possible to indicate whether the employee has to pay for some items necessary for his work himself, such as office supplies, printer ink, etc.

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In fact, only expenses actually incurred by the employee and not reimbursed by the employer can be claimed as part of the deduction.

Calculate the expense portion

It is possible to claim the deduction for various types of expenses, as long as they are not reimbursed by the company, such as ink cartridges, phone costs, office supplies, etc. You can also add part of the electricity and communications bill. However, it will be necessary to calculate the portion that actually applies to the work, on the basis of the share of housing used, or in proportion to the hours spent working in a room in the house if you do not have an office dedicated to this use. Renters can also deduct a portion of their rent, and for landlords, a portion of their condo fees. In the latter case, be careful, you cannot claim amounts allocated to the emergency fund or self-insurance, only those related to the use of the apartment, heating costs for example.

With regard to the Internet, costs incurred for connecting to the network as well as renting a modem or router are not eligible. Only a reasonable portion of the subscription costs can be claimed taking into account the use made of the work.

Does your husband also work from home? You will not be able to claim the entire amount, you will have to share it between you.

Discount, not credit!

Yannick Lemay points out that this is a debit, not a credit. “This means that it reduces net income and taxable income. It should not be confused with a credit which can reduce the tax bill. The positive point is that lower net income can give us access to some of the credits and bonuses on which they are calculated.

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  • It is not necessary to mention remote work literally in the employment contract. A simple written or oral agreement is valid for the tax authorities.
  • Many employers send TP-64.3 and T2200 forms at the same time they send T4 forms to their employees, but this is not systematic. Claim it if you don't receive it.
  • Keep all of your receipts, because it is not uncommon for the IRS to conduct audits. Be careful, bills can fade over time, and it would be in your best interest to scan or photograph them.
  • If you are an affiliate, know that you can also deduct additional expenses such as a portion of your home insurance, property taxes, renting a cell phone, fax machine, computer, etc.