Work-From-Home Tax Deduction for Employees in Canada: T2200, T777 and What You Can Claim

Employees who work from home can deduct part of their household costs, but only when the employer required it and signs a form saying so, and only under the detailed method: the CRA says “the temporary flat rate method does not apply to the 2023 and later tax years.” This page covers the conditions, what salaried and commission employees can claim, how to work out the employment-use share, and how to file. Everything here is from the CRA’s home office expenses for employees pages. If you are self-employed, different rules apply: see business-use-of-home expenses for the self-employed. The page is part of the self-employment and work taxes hub.

Who can claim

To claim the actual expenses you paid for working from home, the CRA says you must meet all of these conditions:

• Your employer required you to work from home; this doesn't have to be in your employment contract, but it should be a written or verbal agreement, and a formal telework arrangement you entered voluntarily counts.
• You were required to pay for expenses related to the work space in your home.
• You can't claim expenses that were or will be reimbursed by your employer.
• You worked more than 50% of the time from the work space in your home for at least 4 consecutive weeks in the year, or
• you use the work space only to earn employment income and regularly and continually for in-person meetings with clients, customers or other people while doing your work.
• The expenses are used directly in your work.
• You have a completed and signed Form T2200, Declaration of Conditions of Employment, from your employer.

A few details from the CRA’s eligibility page:

• If you had more than one qualifying period in the year, you can claim the expenses for each period. If you qualified for only part of the year, you claim only the expenses paid during that period.
• A partial reimbursement doesn’t stop you claiming the rest; you just leave out the reimbursed part.
• A formal telework arrangement that you voluntarily entered into with your employer counts as your employer requiring you to work from home.
• Your employer decides who is authorized to sign Form T2200; the T2200 form guide covers what the form contains.

The time test is about your own working schedule. The CRA’s examples include a part-time employee who works three days a week and has to work one of them at home: she doesn’t pass the time test, so she can’t claim. An employee who has to work three days of a five-day week at home does.

What you can claim

Commission employees, who sell goods or negotiate contracts and typically have an amount in box 42 of their T4 slip, can claim some expenses salaried employees can’t.

A few details from the CRA’s notes:

• Condo fees: only the part that pays for the electricity, heat and water used in your own unit, worked out on a reasonable basis. If you pay those utilities directly to the providers, no part of the condo fees is deductible.
• Repairs: a repair to the work space alone (repainting it, replacing its light bulbs) can be claimed in full if reasonable; one that serves the whole home (a minor furnace repair, cleaning products) is claimed at the work-space percentage; one in a room you don’t work in can’t be claimed.
• Rent: only renters claim it. A homeowner can’t claim the rental value of the work space.
• Spouses who both qualify: decide who claims which expense; each expense can be claimed only once.

Office supplies and phone

Supplies that are used up directly in your job, such as pens, paper, ink and toner, envelopes, folders and postage, can be claimed by both salaried and commission employees if your employer required you to pay for them. Equipment can’t: the CRA’s list says no to buying a computer, monitor, printer, desk, chair, headset, webcam, software or online subscriptions, and no to capital cost allowance, for salaried and commission employees alike. Long-distance work calls are deductible, and so is the employment part of a basic cell phone plan if the plan is reasonable, reasonably split between work and personal use, and you can show the minutes or data used for work. The monthly basic rate of a home land line is not.

Working out the employment-use share

1. Work space as a share of the home. Divide the area of your work space by the area of all finished areas of the home (including hallways, bathrooms and the kitchen). The work space must be a reasonable size; in an open-concept home, use a reasonable part of the open area, not all of it.
2. Type of space. A designated room used only for work counts at that percentage, whatever your hours. A common area that also has other uses, such as a kitchen table, is also reduced by your work hours divided by the 168 hours in a week.
3. Apply the percentage to each eligible expense you paid while you met the conditions.

A kitchen table area that is 12% of the home, used 40 hours a week, is 23.8% of the week, so about 2.9% of the home’s eligible costs. Two people sharing one work space each use their own share of its area. If you move or switch work spaces during the year, you work out each period separately.

Limits on the claim

• Part of the year: you can claim only the expenses paid in the part of the year you worked from home under the conditions.
• Several income sources: the expenses can be deducted only from the employment income they relate to.
• No employment loss: the claim can’t be more than the employment income left after your other employment expenses. Any amount you couldn’t claim can be carried forward to the next year if you report income from the same employer, but it still can’t create or increase a loss. Commission employees whose expenses are more than their commission income may also be limited.

How to claim

1. Confirm you meet every condition above, and get Form T2200 from your employer.
2. Fill in Form T777, Statement of Employment Expenses. It is the form for any year from 2023 on, whether you claim only home office expenses or other employment expenses too, such as motor vehicle costs. The CRA’s online calculator gives the employment-use amounts to enter.
3. Enter the amount from line 9368 of Form T777 on line 22900, Other employment expenses, of your return.
4. File Form T777 with your return. Keep Form T2200 yourself; it isn’t sent with the return.
5. Keep the T2200 and your receipts and other supporting documents for six years. The CRA may review the claim.

If you also paid GST/HST on deducted employment expenses, you may be able to get some of it back through the employee GST/HST rebate.

The flat rate method (past years only)

For the 2020, 2021, and 2022 tax years, employees who worked from home because of the COVID-19 pandemic could claim $2 for each day worked from home instead of tracking expenses, up to $400 for 2020 and $500 for each of 2021 and 2022, on Form T777S with no T2200 needed. Form T2200S was a short version of the T2200 for employees who worked from home because of the pandemic in those years and used the detailed method. Neither the flat rate nor these short forms apply to 2023 or later returns.

If you are self-employed

Self-employed people don’t use Form T2200 or T777; they claim business-use-of-home expenses on Form T2125. A self-employed person can deduct business-use-of-home expenses only if the workspace is their principal place of business, or they use it only to earn business income and on a regular and ongoing basis to meet clients, customers or patients. Only the business part of costs such as heat, electricity, insurance, property taxes, mortgage interest and capital cost allowance is deductible, worked out on a reasonable basis such as the workspace's share of the home's area. The deduction can't be more than the business's net income before it, so it can't create or increase a business loss; any amount not deducted carries forward to the next fiscal period. The details are in home office expenses for the self-employed, and contractor vs employee taxes covers how the CRA decides which group you are in.

Related guides

• Self-employment and work taxes hub
• Home office expenses for the self-employed
• Taxes for remote workers
• Contractor vs employee taxes
• Tax deductions and credits
• Union dues deduction