Personal Income Tax in Ontario
As the whole world is confined to their homes due to the pandemic, thousands of Canadians could be entitled to profitable tax deduction. As coronavirus issue is unlikely to go away anytime soon, most of the Canadians have assumed to divide their time between home and work. Whilst there are still a few months left till the next CRA tax filing deadline in April 2021, here is how potential tax deductions can benefit salaried employees by also staying organized along the way.
Just how much money could I save?
Writing off expenses will directly reduce the income on which you pay tax and can help you fall in lower tax bracket. In easy words, suppose you make 1000$ income and your marginal tax rate is 10 percent. So, if you write off 50$ on working from home expenses, then you will pay your tax amount on 950$ and not 1000$. This is how you can save 50$ through Personal Income Tax in Ontario easily.
What are the CRA rules right now?
Under present rules, salaried employees are unable to write off much amount when it comes to work from home expenses. Although many stationery supplies like printer paper, ink, cartridges, pens, stamps, etc. may work for you. However, in order to receive deductions on headsets, desks etc, the rules will have to change. Luckily, many organizations are asking CRA to ease the rules and make it less restrictive for employees so they can save up. Until then, the employees need to have a contract that states that the employer requires the employee to use his own car, home and other personal things in order to do his job.
Can I deduct my internet fees?
Unfortunately, the same fibre or cable that allows you to use Netflix does not include in tax- deductible business expense if you are doing your job from home. But if someone did not have internet before and just got the connection for this purpose, only then the tax-deductible business may be counted. However, employees who earn commission are also allowed to deduct a portion of their property tax and insurance from their home offices.
How do I apply for a tax break?
Basically, CRA requires the employees who apply for deduction to fill out the TT2200 form, which explains the nature of your work from home requirement. However, with millions of people working from home, this process can be exhausting for both the employers and the CRA. Even though the rules have not changed yet, conservative revenue critic Marty Morantz has requested the government to clarify its plans. Till then, the employees will have to hold on to their receipts.
Do not waste your savings.
So, if you are working from home since March 2020, you are most probably eligible for a nice tax break. You just have to be careful regarding what you will do with it. As the coronavirus continues to spread throughout the country, further confinement measures could mean trouble for your finances.