The Motley Fool
Published Apr 30, 2021 11:53
Updated Apr 30, 2021 12:16
CRA 2020 Tax Filing: Don’t Miss the $400 Home Office-Expense Deduction
Are you working from home and at the same time have your MyCRA account open on another tab? Are you doing your 2020 taxes and looking for some quick tax deductions for which you don’t need documentation proof? Then the $400 home office expense deduction is for you. The Canada Revenue Agency (CRA) introduced this temporary deduction only for 2020 for those who worked from home during the lockdown. Here is a quick guide on this deduction.
The home office expense deduction is not a new benefit, but it was mostly used by freelancers who worked from home. But that is a lengthy process and requires a lot of calculation. There are three layers of calculation: the utility and other bills, the portion of your home used for work, and the number of working hours. All this was fine while a small segment of the population availed the deduction.
But the pandemic shifted a significant portion of the workforce to working from home. Special circumstances called for special deductions. Hence, the CRA created a temporary flat rate method.
Are you eligible for the home office expense deduction? You can use the temporary flat rate method for home office-expense deduction if you meet the following criteria:
To claim this $400 deduction, all you need to do is fill Form T777S and file it with your income tax returns.
2020 Taxable Income | Tax rate |
$1 to $48,535 | 15% |
Over $48,535 to $97,069 | 20.5% |
Over $97,069 to $150,473 | 26% |
Over $150,473 to $214,368 | 29% |
Over $214,368 | 33% |
Make the most of the CRA benefits The CRA offer other forms of tax benefit savings accounts. While you have run out of time to use any of these accounts for 2020 tax filing, you can use them for future tax filings. For 2021, the CRA allows you to contribute 18% of your income or $27,830, whichever is lower, in the Registered Retirement Savings Plan (RRSP). You can deduct your RRSP contribution from your income tax bill.
As we are on the work-from-home topic, a company that made doing so possible with its broadband connectivity is BCE (TSX:BCE)(NYSE:BCE). It has Canada’s largest telecommunication network and enjoys steady cash flow from subscriptions. It has a rich history of paying a dividend for more than 20 years and even increased its dividend by over 6% in the last 12 years.
BCE is currently in the middle of an upgrade to 5G. It has accelerated its capital spending to expand its 5G footprint. Once the 5G momentum kicks in, it will make mission-critical applications, like smart city and autonomous cars, a reality. The 5G opportunity could increase BCE’s revenue multiple folds and even increase its dividend-growth rate.
The post CRA 2020 Tax Filing: Don’t Miss the $400 Home Office-Expense Deduction appeared first on The Motley Fool Canada.
Fool contributor Puja Tayal has no position in any of the stocks mentioned.
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Written By: The Motley Fool
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