Evelyn Jacks: Claiming Employment Expenses

Do you spend money in the course of your work that’s not reimbursed by your employer? Certain employees may, in fact, claim out-of-pocket expenses on their tax returns.

However, the Income Tax Act is very specific about the expenses that may be claimed.

The deduction for these costs will ultimately show up on Line 229 of the T1. It’s a good idea to use Form T777 Statement of Employment Expenses as a guide to the receipts you need to look for. You’ll also need to have Form T2200 Declaration of Conditions of Employment signed by your employer.

Employees may claim certain specific expenses of employment, depending on whether the employer will verify this was a necessary condition of employment. This includes travel costs, the cost of using an auto to earn income, supplies used up in the course of employment, the cost of an assistant, and home office costs. Home office costs cannot create or increase a loss, but may be carried forward for use in a future year.

Commissioned sales people can claim more expense categories—sales and promotion expenses for example—because they are expected to foster relationships with clients in their negotiation of contracts for their employers. However, claims are limited to commissions earned. No commissions this year? Make a claim for travelling expenses only.  

Form Filing Tip:  Form T2200, Declaration of Conditions of Employment, signed by the employer, is required for each year in which tax-deductible expenses are claimed. This form must be kept on file for CRA to review.

It’s Your Money. Your Life. Claim all the expenses you are entitled to as a deduction. . .then invest your bonus in a TFSA or RRSP. It’s a good way to leverage your good tax fortune!

Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition is now available. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management”  Follow Evelyn on Twitter at @EvelynJacks.