Tax Tips: What Expenses Can Employees Claim on The Tax Return?

There are over 28 million tax filers and two-thirds of them pay income taxes, on average at a rate of 16% of total income. The vast majority of those taxes - 70% in fact - come from employees, whose earnings are subject to tax withholdings with every paycheque.

Unfortunately, most costs of going to work, such as car expenses, clothing, etc. are considered to be personal in nature and are not deductible. However, for most employees, relief can be found through the Canada Employment Amount, a non-refundable tax credit of $1161 (in 2016) to acknowledge the normal costs of going to work, including  driving to and from work, lunches, dry cleaning and other expenditures that are required as a matter of course.

Another non-refundable tax credit, the Public Transit Amount, will provide some tax relief, and you’ll want to save receipts for any transit costs you incur, to ensure that you’re eligible to claim this credit. These amounts may be claimed by either spouse so long as the same expense is not claimed by both. The credit is 15% of your monthly expenditures. All the travel pass costs for every member of the family (who is under age 19 at the end of the year) can be claimed by one parent. There is no maximum claim.

If you must travel at least 12 hours away from your employer’s place of work to perform your duties of employment, you may be able to deduct the costs of travel if you’re required to pay your own expenses and are not reimbursed or do not receive an allowance. The employer must verify the terms of your contract of employment and sign form T2200 Declaration of Conditions of Employment.

Employees who must work out of a home office, pay for supplies for work-related purposes, use a cell phone or pay for their own assistant may also make a claim for out-of-pocket expenses in some cases. Check out form T777 Employment Expenses and speak to a DFA-Tax Services Specialist for help with these claims.

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