Howard is employed as a computer programmer and is required by his employment contract to maintain an office in his home. There is only one telephone line in Howard’s home. He estimates that 40% of the usage of his telephone is employment related (all local calls). He purchased a new computer for his office on September 1 of the current year. He estimates that he uses the computer 90% for employment purposes. Howard works in his home office four days each week and attends meetings at his employer’s place of business on the fifth day. The office occupies 10% of the square footage of his home.
He incurred the following costs in the current year:
Mortgage interest (10%)………………………… $1,200
Property taxes (10%)………………………… 340
House insurance (10%)………………………… 120
Utilities (10%) ………………………………. 420
Maintenance (10%)………………………… 200
Telephone (40%)………………………… 210
New computer (100% of cost) ………………… 1,300
What is the maximum amount that Howard can claim in the current year for the costs he has incurred in respect of his home office? Income tax reference: ITA 8(1)(i), 8(13).