As an employee, your tax returns can be very simple; your employer gives you a T4 and you file your return based on it. But did you know there are ways you can maximize your tax return that you may not be taking advantage of? One main way is the T777 form, which is the Statement of Employment Expenses.
If you are an employee and your employer requires you to pay expenses to earn your employment income, you may be eligible to claim these expenses on the T777 form on your Personal Tax Return.
The T777 form outlines some key expenses that you can write off, even as a salaried or commission-based employee; with permission from your employer to do so. You must have a filed out and signed copy of the T2200 – Declaration of Conditions of Employment from your employer that outlines why you are eligible to deduct expenses. Some common expenses that you are eligible to write off would be accounting and legal fees, advertising, cellphone, meals and entertainment, parking, supplies and traveling. Some ineligible expenses however would be the cost of travel to and from work, or other expenses such as tools or clothing – these are considered personal. However, for 2019, to cover these “personal” expenses, you maybe eligible for the Canada employment amount credit of $1,222 (or the total employment income reported if lesser). An exception to the tools exemption is the tradesperson tool deduction, if you are given permission from your employer you can claim up to $500 on tools used for your employment.
There is also the opportunity to calculate your vehicle expenses and home office expenses if you own a vehicle and must use it for your employment (other than the trips to and from work) and use it for business or operate out of a home office as an employee.
See our posts for more information for home office deductions “Home Office – Is This an Eligible Deduction For You?” and vehicle deductions “What is an Eligible Deduction For Your Vehicle Expenses?”.
There is also an opportunity to provide information on capital cost allowance (CCAs), which refer to assets to your employment income (ex: computers, vehicles etc.) and calculate the amortization, which is an expense also.
You may also be eligible on a GST/HST rebate for the GST/HST paid on the expenses on the T777.
Keep in mind for any business-related expenses, there must be corresponding proof. As well, personal portions of any expense cannot be written off for business purposes (meals and entertainment that was not for a client, personal travelling, personal use of cellphones and vehicle, cannot write off total home expenses). This requires keeping accurate and up to date bookkeeping and holding onto receipts/invoices to ensure you are protected in an audit situation.
At Jibe Accounting, we are happy to assist you navigate the T777 and help you determine what expenses are eligible; and making the most out of your tax return!