For a second year in a row, the Government of Quebec is renewing the simplified procedure for the deduction of expenses related to teleworking due to a pandemic. The eligible amount has been increased from $400 to $500 in 2021. But is it better to use this method or opt for the detailed form? Many taxpayers ask themselves this question as they prepare to file their income tax return.
“I always tell my clients to ask for the form [pour la méthode détaillée] to their employer. That way, when the accountant makes the tax return, he is able to make the comparison,” advises Justine Brossard, professor in the Department of Accounting Sciences at ESG UQAM.
She points out that with “a few very simple expenses,” often the detailed method can be advantageous. “Someone who has an office is going to accumulate more than the $500 cap. Then, the detailed method is more profitable. It’s worth asking your employer for the form so that the accountant can do the analysis, ”explains the one who is also a chartered professional accountant (CPA, CA).
Not the same expenses for everyone
An employee working from home will be able to deduct certain basic expenses for his home office, such as Internet, cell phone and electricity costs. “The Canada Revenue Agency asks that the employee keep his invoices, in case there is an audit,” says Ms.me Brossard. It is also possible to include those related to the purchase of pencils or other supplies used in the context of the work, if they have not already been reimbursed by the employer.
An employee who has a room devoted to work in his home could also claim maintenance costs, such as those for painting the walls. But taxpayers should consider whether the expense is exclusively for a professional setting or whether it is also used for other activities in the house.
For example, for a room allocated to the office which is equivalent to 15% of the surface area of a property, “for electricity, by accumulating all our bills for the year, we will be able to deduct 15%”, illustrates the professor . Other expenses such as maintenance costs and household products can also be added to the declaration. If the product was acquired with the intention of being used solely to maintain the telecommuting space, the expense may be claimed in full.
Employees who are tenants can also deduct a percentage of their rent, equivalent to the square footage of their office. However, homeowners cannot do the same with their mortgage.
Can a person who works from his dining room without an assigned space for his task also deduct his expenses? Yes, but the calculation is different, says Mme Brossard. Thus, the calculation is made on the number of hours the room is used for work. “If I work 40 hours a week, the calculation is made on 168 hours [le nombre d’heures dans une semaine de sept jours]. This reduces our percentage a little. And in these cases, it may be more advantageous to take the temporary fixed method,” she explains.
Some commission employees may also deduct expenses related to insurance and taxes, notes the accountant. “But these are not deductible expenses for people in general,” she points out.
However, office furniture and chairs are not deductible for an employee working from home. “Usually it’s going to be at his expense. Unless he has the possibility of having an amount reimbursed by his employer”, observes Mme Brossard.
New benefits for parents
The Government of Quebec has also made a change for parents who send their children to daycare services.
Thus, the limit on eligible expenses has been increased, from $9,950 to $10,400. This equates to full-time child care for 260 days at a daily rate of $40.
Quebec has also increased the tax credit for childcare expenses. The rate for families with income over $101,500 is now 67%. In 2020, it was 57% for those earning more than $100,000 and 26% for those whose annual salary exceeded $163,000, details Mme Brossard. “It’s still quite rare, but there has really been an improvement for higher income households. »