Tax Tips: What Tax Deductions Can Employees Claim?

Employers are generally required to pay for the premises, assets and supplies used up by their employees in performing their duties, but in some cases the employee will pay for those costs and be able to claim a tax deduction for them.

Most commonly, that’s true for commission salespeople, who negotiate contracts for their employers.  Other employees, however, may be able to make claims, too.  In both cases, the employer, must verify in writing on Form T2200 Declaration of Conditions of Employment, what expense reimbursement was given and that the out-of-pocket payments were required as a condition of employment.

Examples of deductible expenses include supplies used up directly in the work (stationery, maps, etc.), salaries paid to an assistant (including spouses or children if Fair Market Value (FMV) is actually paid for work actually performed) and office rent or certain home office expenses.

In addition, certain types of employment qualify for out-of-pocket expense claims:

Employed artists, for example, are allowed to claim the cost of supplies used up in their employment to a maximum of 20% of net income or $1,000.

Long-distance truck drivers may claim the cost of board and lodging according to specific rules while en route. Receipts must be kept to verify lodging claims and meals, unless a “simplified method” is used: a flat rate of $17 a meal up to a maximum of 3 meals a day; this includes sales taxes. To make the 3-meal claim, you must be away from your municipality or metropolitan area for at least 24 hours. Use form TL2 Claim for Meals and Lodging. Qualifying truckers can deduct 80% of their meal costs. 

Finally, certain tradespersons may claim the cost of tools purchased (in excess of a threshold amount) if required by their employer for use in their employment ($500 maximum claim). See your Tax Services Specialist  for assistance with deductible employment expenses.

Additional Educational Resources include: T1 Professional Tax Preparation – Basic and Family Tax Essentials by Evelyn Jacks.

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