As the COVID-19 pandemic has hit the country, we have seen how there has been a paradigm shift in the work styles and work from home has become a common phenomenon. If you are also working from home, you may want to know what all expenses you can claim as a deduction while finalizing your tax return and how you can calculate these expenses.  

Here is a glimpse of what all you can find in the article. 

  1. Conditions for claiming a deduction 
  1. Which expenses can be claimed as a deduction? 
  1. Calculating additional running expenses using the shortcut method 

Let’s get started! 

Conditions for Claiming a Deduction 

Let us have a look at what all conditions will have to be fulfilled to claim a deduction for work from home expenses. 

  • You must incur the expense by way of spending money. This would mean that you can’t claim a deduction for those items or facilities that are provided to you by your employer. 
  • The expenses that you claim shall have a direct nexus with your work and income. 
  • You must have records that can substantiate the expenses incurred by you. 

Make sure all these conditions are met so that you can claim the deduction. 

Which Expenses Can be Claimed as a Deduction? 

If you are temporarily working from home then you can claim a deduction for additional running expenses that you incur in connection with your work such as: 

  • Electricity expenses including the expenses incurred on lightening, cooling and heating as well as electric items that you use for your work; 
  • Cleaning costs related to your dedicated work area; 
  • Phone and internet expenses;  
  • Home office equipment such as laptops, printers, telephones, furniture, etc. You can either claim the full cost of such items that cost up to $300; if the cost of items exceeds $300 then you can claim a deduction for decline in the value of such items. 
  • Other running costs such as computer consumables and stationery. 

However, you must note that you can’t claim a deduction for occupancy expenses such as property rent, rates and taxes, interest on property loans, etc. 

Calculating Additional Running Expenses Using the Shortcut Method 

In this method, you can claim 80 cents for every work hour for additional running expenses provided you are carrying out employment duties and not just occasional emails or calls. You may note down the following points when you use this method. 

  • You can claim the deduction even if you don’t have a dedicated work area. 
  • All the deductible running expenses discussed above that you have incurred additionally due to working from home can be claimed as a deduction. 
  • If you adopt this method then you can’t further claim a deduction for the same expenses anywhere again. 
  • To arrive at the deduction amount, you must maintain records of the number of hours that you have devoted to work, such as timesheets.  
  • While filing your 2019-20 return make sure you quote the “COVID hourly rate” in the return.