Home Office Expenses
While the health effects of the pandemic continue to unfold, so too do the tax implications of the actions required to combat it. We are early in the tax year, but most employees in Canada have been required to work at home for at least some portion of their work. Under Canadian tax law, an employee who is required to incur expenses in order to perform their work is entitled to claim expenses. If working from home required you to buy supplies, or use personal equipment which your employer did not reimburse you for, those expenses are deductible on your 2021 tax return. Make sure to obtain a form T2200 from your employer after December, 2020, to document the requirement. This should already be on the minds of employers and employees for 2020. Some added and welcome relief to taxpayers at the end of a terrible year.
Child Care Expenses
Many of us may be realizing just how wonderful childcare is at this point. It is yet to be determined if the government will be expanding allowances for parents caring for children who cannot go to school, but the existing deductions and credits should not be overlooked. Many expenses to care for children not in school are deductible. Expenses could be directly related to virtual care or engagement of children while the parents work from home. After-school, and out-of-school programs, including camps, might all be deductible.
Business Investment Losses
The full economic impact of the coronavirus may not be tallied for years to come, but many individuals will experience financial loss. Three out of five Canadians already report losing investments due to the pandemic. Businesses which have gone bankrupt, loans made and not repaid, these are common examples of losses which are deductible on your tax return against all forms of income. For business owners and operations, as well as investors, make sure to evaluate this major deduction for your 2021 tax return.
For any questions on these deductions, please contact Roman Belenky or Shawn Bausch for a free consultation.