What qualifies as an employment expense?
While working the 9-5 grind, it’s common to incur various expenses related to your job for mastering work expenses. Many Canadians find themselves paying for work-related items out of their own pockets. However, it’s important to exercise caution when claiming these expenses. Not everything you purchase for work is considered a valid employment expense. Let’s explore what qualifies and what doesn’t:
- Necessary work-related expenses: You can claim expenses that are directly related to performing your job or required for your employment. This includes tools, equipment, and supplies necessary to carry out your duties.
- Travel expenses: If your job involves travel, certain costs like transportation, accommodation, meals, and incidentals may be eligible for deductions. However, it’s crucial to ensure these expenses are incurred for business purposes and not personal leisure.
- Home office expenses: If you work from home, you may be eligible to claim a portion of your housing mastering work expenses, such as rent, utilities, and internet, that are directly related to your work. However, specific criteria must be met, including having a designated workspace used solely for employment purposes.
- Professional development and education: Costs associated with enhancing your professional skills and knowledge, such as attending conferences, workshops, or taking courses, may be deductible.
- Uniforms and protective clothing: If your job requires specific uniforms, protective gear, or specialized clothing, the expenses incurred for their purchase and maintenance may be claimed.
On the other hand, there are certain expenses that typically do not qualify as employment expenses:
- Personal grooming and clothing not required for specific job-related purposes.
- Commuting costs from your home to your regular workplace.
- Expenses reimbursed by your employer or any expenses that are considered personal in nature.
Remember, it’s crucial to maintain proper documentation and receipts to support your claims. Consult with a tax professional or refer to the Canada Revenue Agency (CRA) guidelines to ensure you’re accurately claiming valid employment expenses and maximizing your tax deductions.
Know the Dos and Don’ts for Mastering Work Expenses
Navigating work-related expenses for tax purposes can be a bit tricky. While some expenses are clearly eligible for claims, others require careful consideration. So, where should you draw the line? Here’s what you need to know to properly claim your expenses on your tax return:
- Check your employment contract for expense inclusion While there’s a specific line for employment expenses on tax returns, it’s essential that your employment contract outlines the expenses you’re required to cover. These could include items like travel, meals, home office expenses, or cell phone usage. Only approved expenses specified in your employment contract can be claimed.
- Gather the necessary documents for your claim To substantiate your expenses, you’ll need a completed T2200 form, also known as the Declaration of Conditions of Employment. This form must be signed by your employer before the Canada Revenue Agency (CRA) approves your expense claim.
Both an approved employment contract and a completed T2200 form are required. Even if you have a completed T2200, without an employment contract listing specific expenses, you won’t be able to make a claim.
- Maintain meticulous records To avoid any issues with your work-related expense claims, it’s crucial to be diligent with record-keeping. Keep all your receipts, and if you’re claiming mileage, maintain a detailed logbook recording the kilometers driven for work purposes.
- Crunch the numbers and follow the ratios The CRA recognizes that it’s impractical to have duplicates of everything, so many expenses are calculated using percentages. For instance, if you use your personal vehicle for work, refer to your car logbook mentioned in #3. Calculate the percentage of work-related kilometers driven and claim that portion of your gas, maintenance, insurance, and registration expenses. If work trips constitute 20% of your total mileage, you can claim 20% of your auto expenses for that year.
The same principle applies to cell phone usage. Track the time spent on personal calls versus work-related calls to determine the percentage of charges you can claim. Since most individuals have a personal use component, claiming 100% of the charges is generally not allowed.
Unless supplies are fully consumed at work, claiming their entire cost is usually not permitted. Examples of directly consumed supplies include stationery and bandages, while uniforms or safety boots typically don’t fall under this category.
- Keep your records accessible even after filing When filing your tax return, whether electronically or on paper, you don’t need to submit your receipts or T2200 form immediately. The CRA usually requests these documents for review in late summer or fall (within three years after the initial assessment of your return). Hence, it’s important to keep your well-organized receipt folder readily available, as employment expenses are frequently reviewed by the CRA.
If you believe you have work-related expenses that qualify for reimbursement but lack a T2200 form or an employment contract detailing expenses, discuss the matter with your employer. They might be willing to review your costs and provide the necessary documentation before claiming them on your return.