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I've just been hired full time at a firm I used to independently consult at. As a sole proprietor, I'm used to writing off my home office space, various software subscriptions, equipment, web hosting, phone, internet, etc.

Now that I've been hired full time, and though I still have to incur the same costs (still working from my home office, still need the software in question), can I no longer write these expenses off? Or should it be normally expected that my full time employer would cover or reimburse these costs?

I will also still be doing some side freelance work for other clients, as an independent contractor - so does that mean I can apply my expenses against that "other" income?

I know that's a few questions - but I'm just starting to wonder if accepting the full time position might actually end up having more cons than pros.

Thanks!

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If your employer agrees to complete Form T2200, Declaration of Conditions of Employment it will determine what expenses you are expected to cover yourself as conditions of your employment. You can then write them off by submitting Form T777, Statement of Employment Expenses with your tax return.

When working for other clients as an independent contractor you can still continue writing off expenses related to that work only as before. This means that you can only reasonably write off 1/24th of 1/365th of your yearly home office expense if you only worked for a particular client for 1 hour, and only if your employer's T2200 states that you are responsible for your office (that is, it's not already covered by your salary).

  • Just looked at those forms. That's great - thank you for pointing me in the right direction. So, previously if I worked 8 hours a day, at my home office in a self employed capacity, and I wrote off 8/24th X 5/7 of my office space usage, and then in the coming year I plan to work 4 hours a day (after hours) on freelance work, I can still write off those hours in exactly the same manner - as 4/24 instead of 8/24? – Glen Rhodes Jan 8 '15 at 23:02
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I can't speak for Canada in special, but as you are an employee, your company should provide all the software, equipment and webhosting required for your work. If they can't provide you with an office on-site, they have to rent some office space for you somewhere. They could even decide to rent it from you, if you provide the best-suited office space in your area. Even if they provide you an office on-site, your home office could still be tax-deductible, but this depends heavily on legislation. I guess a $5 income tax program will know this better than we do (and could be tax-deductible as well).

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