My employer is saying that I don’t need the T2200S

I have now heard from a few clients about their employer saying that I don’t need the T2200S to claim my home office expenses. Is that correct?

There are a couple of points that I would like to make about employers telling their employees that they don’t need the T2200S.

One, the employers do not have the right to instruct their employees on how they are to file the tax return. If they do, they are over-reaching their authority as an employer. No employer has the right to instruct their employees what they are to do outside of work, unless that behaviour reflects badly on the employer. Equally, by doing so, the employer is opening themselves up to being sued by their employees for providing bad advice if the method that the employer wants the employees to use isn’t to the advantage of the employee.

Would you be willing to commit fraud because your employer instructs you to do so?

Two, the CRA requires that you provide the T2200S later, if they then demand the T2200S from the employer to prove that you can claim the deduction. All that they have said that you don’t need the T2200S at the time of filing. They said nothing about requiring it later. They can ask for it up to six years after they issued the Notice of Assessment.

Finally, the CRA has privately indicated to tax preparers that we are required to ask for the T2200S before we file the tax return. Otherwise, they will charge us!

So I recommend that all employees ask their employer for the T2200S automatically if they were moved to working from home due to COVID-19 on or after March 15, 2020.

Working from Home due to COVID-19

This is consolidation of prior posts.

If you worked from home due to COVID-19 during 2020, your employer is expected to issue to you a completed form T2200S. You must complete the final section of the form yourself and provide it to me in order to make the claim.

For clients who wish to make the claim for working for home expenses due to COVID-19, there is a worksheet available in the common folder on the portal, where it will remain for this tax season. The worksheet is one page in length and provides information on how to gather the required information, how long to store that information, and how to report that information to me.

The worksheet is in the folder called, “!Information – Instruction” which should be on the top of the list of folders. All clients with access to the portal received an email with a link to the worksheet.

If you are a client and do not have access to the portal, you can request a portal account. If you would prefer to have the worksheet emailed to you, please reply to an email that you received for your 2019 or your 2020 tax return.

General emails requesting the worksheet and emails from people who are not current clients will be ignored.

What do people want…

Last month, I had a couple referred to me by a financial support services company. The company provides financial services to employees of their client, but have realized that their knowledge is in financial services, not taxes, so refer tax issues to me.

The couple had been reassessed for the prior year (that is, 2017) by the CRA for missing income and asked support services if this was normal. Support services took one look at the returns and referred the couple to me. Which was good for the couple.

Not only was the prior year reassessed, but the previous year was also reassessed, AND the current return (2018) was heading into the same problem.

I spent 2.5 hours with the couple, going over the returns in person, explaining what was happening and what I was seeing and what fixes that I could see. (While I could detail the problems here, the end result was that the returns were wrong.)

A few days later, we had a chat by phone, and they will be coming in to sign the corrections later this week. Yes, they owe a large amount, but the fixes that I have put into place finish the problems. Both 2017 and 2018 was fixed, and the final bill would be slightly less than the bill for 2017 as prepared by the CRA. We agreed not to touch the 2016 as the changes didn’t warrant touching.

As I explained to them, if you had owed the amount at the beginning when you filed, you would have been happy. The only reason that you are unhappy is because you found out the problem two years later. And, while everyone likes a refund, what they really want is no problems.

A correct tax return, even if you owe, is better than one that causes grief.

Tim…

I have to say you are amazing, such a time savings. Just wow. So impressed and happy things are getting cleaned up.

Also love the receipt program. …

Have a great day

(Gatineau: Eric K, 2019)

Tax Errors – Fixing an incorrect return

Last year, I had two new clients come with copies of their past three years of tax returns. (It is my practice to review the prior three years to ensure that I am consistent with the previous years.)

This is part two of two – How ignoring the information available from the CRA  can result in an incorrect return!

For this case, I was specifically asked to check out two years of returns filed by the previous person. I cross-checked the returns against the partner’s information as well as against the CRA’s records.

During this process, it was clear that the person who prepared the returns disconnected the two returns and only accessed the information provided by the taxpayers. This resulted in:

  1. About 16 tax slips not being declared on the tax returns,
  2. About $10,000 of deductions being ignored on tax returns,
  3. About $10,0000 of expenses that were not reported on the matching returns, and
  4. An invalid claim for Tuition Credits transferred from a minor child.

The client has been charged about $15,000 more taxes and penalties than was necessary. Her correct return would have had a balance due that is less than $100.

We are still working with the CRA to fix these errors.

Lessons Learned:

  • In my previous lesson, I talked about duplicating downloaded information. In this case, no download was performed and she had to pay amounts which were completely unnecessary.
  • It is vital that you cross-check information from one part to another.