Having a home office can create big savings on your income tax.
The rules are pretty strict and you have to fill out extra paperwork but it can be worth it in the long run.
We’ve shared with you the basics on claiming a tax deduction for your home office and specifics on what you can claim.
Today, we want to talk about carrying your expenses forward.
What does carry forward mean?
The Canada Revenue Agency (CRA) does not allow you, the small business owner, to create or increase a loss for your business from your use-of-home expenses.
If your use-of-home expenses total more than the income for your home-based business, you have “unused Work Space in Home Expenses,” according to the CRA.
You can use this amount on any ensuing tax year to offset higher income, provided your home office continues to meet the business-use criteria. The CRA gives you an indefinite carry forward, so you don’t necessarily have to use the deduction next year.
You must keep all receipts relating to your home office, and a meticulous record of all your expenses.
Also, if you’re a sole proprietor or partner, you must accompany your T-1 personal income-tax return with a T-2125, the Statement of Business or Professional Activities.
Can you help?
We’d love to help! We specialize in small-business accounting and financial services. Contact one of our tax specialists and we can help you find the tax benefits and deductions available to self-employed individuals and small businesses.
Fill out our contact form or give us a call at 403-226-8297.