If you currently work from home make sure you are taking advantage of a large range of potential savings you can find in-home office tax deductions.
As an employee that works from home, it is very difficult to claim any expenses for your home office as there is a large list of conditions that you must meet in order to be eligible. Your employer must also sign off on the expenses on a Declaration of Conditions of Employment form. However, if you have spent a large amount of money on your home office and you do require it for work, it is worth looking into the parameters sounding these types of claims to see if you qualify.
You can potentially deduct your workplace expenses if you meet one of the following conditions:
- You use the workspace only to earn your employment income and regularly for meeting clients.
- The workspace is where you mainly (more than 50% of the time) do your work.
The case for self- employed individuals is vastly different from that of employees. If you are self- employed it is much easier to claim your home-office as an expense. Working from home can also allow you to claim a percentage of :
- Home maintenance and repairs
- Home insurance
- Property taxes
- Mortgage interest
How to calculate the percentage for business usage of your home?
There are two ways to calculate it:
1. Per square foot, such as the area of the workspace divided by the total finished area of your home.
2. Per number of rooms. For example, if you have 5 rooms and one of it you use for business, you can claim 1/5 = 20% of your home expenses from the above list.
When deducting maintenance costs, make sure that you are claiming items that were used entering for your workspace. For example, if a can of paint was used on your workspace and another room in the house then that can of paint is not deductible. For more information see the CRA website here, http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/cmmssn/hm-eng.html.
Working from home has the potential to save you big bucks, but understanding the rules and guidelines can be difficult. Consulting the professionals at Tax and Accounting Services will help you to make the most of these savings. Contact us today at email@example.com