[ions]

Hello Canadian Money Forum,

I am self employed and I noticed I have an amount in my Turbo Tax for the Business-use-of-home-expenses available to carry forward.

How can this value be used in my future Tax return(s)?

Thank you

 

[RussT]

Presumably you had zero net self-employed income in 2020 and did not need all of your business-use-of-home expense in 2020. Yes, you can carry this forward to reduce self-employed income in future years.

 

[Covariance]

You can only claim an amount for home office expenses (on T2125) that brings your net income down to zero. IE a loss can not be created due to home office expenses. Any unclaimed amount can be used to reduce future self employed income. But obviously as you carry forward you can not use the old plus the new to create a loss in the future. Thus if this year is a one time drop in revenue or start-up, then okay. But if this is expected to be ongoing be careful trying to claim that much as it is clearly not sustainable.

 

[ions]

Thank you for your responses. So let's say I had $1,000 in Non-Capital Loss Available for Carry Forward and $1,000 in Business-use-of-home-expenses available to carry forward. Let's assume I will have $50,000 Net income after all business expenses in 2021. These two Carry forward items will reduce my taxable income to $48,000 in 2021?

Thank you

 

[RussT]

In my earlier response I wrongly assumed (for no good reason) that you had used some of your business-use-of-home expenses to reduce your business income to zero, and had some of the expenses left over to carry forward. Of course a carry forward can occur if there was a business loss before any business-use-of-home expense was applied.

To answer your latest questions, yes, your net business income would be $48,000 after applying the business loss and business-use-of-home carry forwards. Of course your 2021 business-use-of-home expense could also be taken and I assume the $50,000 after all expenses was net of the 2021 business-use-of-home expenses

 

[ions]

Yes, your assumptions are correct RussT and thank you for answering my question.