Are you a small business and work from home? You’ll want to read this before filing your taxes!

Are you one of the thousands of small business owners who work from home? If yes you will definitely want to know about KEY CHANGES to claiming these expenses for your 2023 taxes. 

When the pandemic hit in 2019 many employers allowed their employees to work from home. For the most part this continued through to the end of 2022. Through those years the CRA offered a temporary, flat-rate method for claiming home expenses of $2 per day up to a maximum of $500. No more! There is a new method you must use to break down your expenses.

Eligibility Criteria

You should first check your eligibility to file taxes from home through this CRA checklist . You have to meet ALL of their conditions to be able to claim. The CRA page also provides examples of different work arrangements.

Once Eligible, What Can You Claim and How Do You Claim It

If you or your spouse work from home (or if you run your own business) there is now a detailed method for filing. What does this mean for you? It means you will have to diligently track your expenses and perform a few calculations based on your working space and time spent at home.

The detailed method also requires you to submit a signed T2200 form from your employer (if you are not self-employed) verifying that you primarily work from home (i.e., more than half your working days).

Fortunately the CRA has a tool to help break down these expenses and determine what you are eligible to claim for working-from-home expenses.

You can also read the CRA “Expenses you can claim” page for more understanding of work-from-home expenses including the limitations on what you can claim. Just one example, if you are claiming a portion of the electricity bill, natural gas, or internet provider you would have to collect 12 months of these bills, add them up, and prorate them. The detailed method is not for everyone and many people will choose not to claim work-from-home expenses going forward.

Speaking to your tax advisor is the best way to learn about this and other changes to your 2024 taxes.

What other questions do you have about working from home and your taxes?