Why you can’t claim 250 days of working at home in 2021…

The government has permitted people who have to work from home due to COVID-19 to make a claim for up to 250 days at a rate of $2 per day. But claiming the full number of days would be rare assuming that you are a white collar worker, which is the usual claimant for working from home.

Let us check the math…

There are 365 days in 2021, and 52 weeks. That means that there are 52 Saturdays and 52 Sundays… a total of 104 days where you would not work a full day. The count of available days are now 365 days less 104 days, or 261 days.

Now there are public holidays where you are expected not to work. In Ontario, there are a total of nine public holidays. In Quebec, there are a total of eight statutory holidays. Other provinces have comparable holidays, but if your employer offers more holidays than the minimum, your numbers go down further. But just using the standard holidays, that makes 252 (Ontario) or 253 (Quebec) remaining days left. Isn’t that enough? No, it isn’t…

A person is expected to take vacation or have occasional days sick or have medical appointments. If you take more than 3 or 4 additional days off, you are now below 250 days.

Which means, the CRA will probably be looking closely at anyone who makes a claim for exactly 250 days or a $500 deduction. In case you don’t realize it, that $500 deduction will probably only save you $75 of Federal tax.

If you make a claim for 246 days, or $492, your savings is $74 of Federal tax and the odds of a review has significantly dropped. So lose 4 days of the claim and $1 of Federal tax!

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)