Everything You Need to Know about Work from Home Expenses in Non-Profits & Associations

In these times, as our workspaces have dramatically shifted from traditional offices to the corners of our living rooms or home studies, there’s a topic that’s been at the forefront for many leaders in not-for-profit organizations, associations, and nonprofits: work-related expenses. Let’s delve into something crucial here – Form T2200. Though it may seem like just another tax document, it’s actually a key component in managing remote work expenses for nonprofits and associations.

Background of T2200 in Pre-COVID Times

Before the world was upended by COVID-19, Form T2200 was the essential document for employees in not-for-profit organizations and associations who needed to claim work-related expenses on their tax returns. This included costs like home office supplies, vehicle use for client visits, cell phone bills, and travel expenses. For employees in nonprofits and associations, this form was a gateway to potential tax deductions, with employers issuing it to confirm these expenses were necessary for their job roles.

Impact of COVID-19 on Work Arrangements and Expense Claims

Come 2020, the landscape changed drastically. Offices closed, and home offices became the new normal, significantly impacting remote work practices in not-for-profit organizations and associations. Recognizing this shift, the government introduced a temporary measure that allowed taxpayers to claim up to $400 in home office expenses on their tax returns without needing a T2200. This was a significant simplification during a particularly complicated time for employees in nonprofits and associations.

Changes in 2023

Now, in 2023, we’re witnessing another shift. The convenient $400 home office expense deduction is no longer available, bringing back the pre-pandemic rules. The T2200 is back in the spotlight, meaning that employees in not-for-profit organizations, associations, and nonprofits looking to claim certain work-related expenses will once again need this form from their employers.

The Dilemma for Employers in Hybrid Work Arrangements

This poses a dilemma for leaders in nonprofits and associations. Suppose you’re an employer with an office that’s only half full due to a hybrid work model, and your employees prefer working from home. Does this mean you’re obligated to issue a T2200 for everyone? This is a gray area that many leaders in the nonprofit and association sectors are currently navigating.

Guidelines for Issuing T2200

The CRA has provided additional guidance for 2023 on the eligibility for claiming home office expenses:

• Employees of not-for-profit organizations are required to work from home by their employers.
• Your organization provides employees with Form T2200, Declaration of Employment Conditions.
• The employee’s home workspace is their primary place of work for more than 50% of the time for at least four consecutive weeks.
• The employees must pay for these expenses themselves, without reimbursement from the association or nonprofit.

What if employees voluntarily work from home? The CRA considers this as meeting the work-from-home requirement for tax deduction purposes. This means employees who choose to work from home more than 50% of the time for at least four consecutive weeks are eligible to claim home office expense deductions, provided they meet the other criteria.

Your Obligations as Employers

There’s no specific guidance from the CRA on employers’ obligations. However, it is believed that the CRA expects employers to issue T2200 forms, allowing employees who choose to work from home to claim their home office expenses.

Best Practices for Employers

For leaders in not-for-profit organizations and associations, it’s crucial to implement and communicate clear policies on work-related expenses. Keeping up with the latest tax regulations and ensuring your policies are in line with these changes is key to effectively supporting your team and maintaining compliance.

Conclusion

As we navigate these regulations, it’s important to remember that Form T2200 is more than a procedural requirement; it’s an integral part of recognizing and supporting your team’s legitimate work-related expenses. In the evolving landscape of not-for-profit organizations, associations, and nonprofits, your role in facilitating accurate and compliant tax practices is invaluable.

Take Action

With the landscape of remote work constantly evolving and tax regulations changing, ensuring compliance while supporting your employees’ needs is more crucial than ever. If you’re seeking guidance on issuing Form T2200, understanding your obligations as an employer, or implementing best practices for managing remote work expenses, our team is here to help. Contact us today to ensure your organization navigates these changes with confidence and compliance. Let’s work together to support your team and streamline your work-related expense management.