Understanding the T2200 Form: Your Comprehensive Guide to Employment Expenses

If you are a working professional in Canada whose company has introduced remote working or you work from home and want to claim your unreimbursed employment expenses this tax season, then this article will be particularly helpful for you.

The rules for professionals working for an organization (remote working or work from home) are different as compared to freelances and self-employed people. For employees there can be various deductions in the tax season and that’s when the T2200 form comes into picture.

If you are employed on a salary basis, you have the option to include specific employment-related expenses on your tax return. To do so, your employer should complete the T2200 Declaration of Conditions of Employment form. It's important to note that there are stringent guidelines governing the types of expenses eligible for claims, and all expenses must receive prior approval from your employer. If you worked from home as a result of COVID-19 and your employment expenses exceed the flat rate of $500, you can utilize the T2200s form to make these claims.

Use of T2200 form

the T2200 tax form is a form used in Canada for employment expenses. More specifically, it is known as the "Declaration of Conditions of Employment" form. The T2200 form is provided by employers to employees who incur employment expenses that are not reimbursed by their employer and that are required as a condition of their employment. These expenses can include items such as –

• Home office expenses (if you work from home)
• Vehicle expenses (if you use your own vehicle for work-related purposes)
• Certain supplies and tools required for your job
• Safety gear or uniforms required for your job
• Professional dues or membership fees required for your job

To claim these employment expenses as deductions on your income tax return, you typically need to meet certain criteria and maintain proper documentation of your expenses. The T2200 form is important because it is a declaration from your employer that confirms the necessity of these expenses for your job. You must attach the T2200 form to your tax return when claiming these deductions.

What can I deduct from the T2200 form?

The T2200 Declaration of Conditions of Employment form in Canada is used by employees to claim certain employment expenses as deductions on their income tax return. To be eligible for deductions using the T2200 form, you must meet specific criteria and have expenses that are required as part of your job. Here are some of the expenses that you may be able to deduct with the T2200 form –

• Home Office Expenses

If you are required to work from home as part of your job and your employer provides you with a completed T2200 form, you can deduct expenses related to your home office. This may include a portion of your rent or mortgage interest, utilities, property taxes, and maintenance costs.

• Vehicle Expenses

If you are required to use your own vehicle for work purposes and your employer provides you with a completed T2200 form, you can deduct expenses such as fuel, maintenance, insurance, and depreciation related to the business use of your vehicle.

• Supplies and Tools

Expenses for supplies and tools that are necessary to perform your job and are not reimbursed by your employer may be deductible. This can include items like specialized tools, work-related software, and office supplies.

• Safety Gear and Uniforms

If you are required to purchase and maintain safety gear or uniforms for your job, and these expenses are not reimbursed by your employer, they may be deductible.

• Professional Dues and Membership Fees

If you are required to maintain professional memberships or pay dues as a condition of your employment, these expenses may be deductible.

• Meals and Entertainment

In certain situations, where you are required to entertain clients or customers, you may be able to deduct a portion of your meal and entertainment expenses. However, there are strict rules and limitations on these deductions.

• Travel Expenses

If your job requires you to travel and incur expenses for accommodations, meals, and transportation, you may be able to deduct these expenses.

There are specific rules and limitations for each type of expense, and you must meet the conditions outlined in the T2200 form provided by your employer. You should keep detailed records and receipts to support your expense claims, as the Canada Revenue Agency (CRA) may request documentation to verify your deductions.

To ensure that you are claiming the correct deductions and complying with current tax regulations, it's advisable to consult with a tax professional or review the most recent tax guidelines provided by the CRA. Tax laws and regulations can change, so it's important to stay up to date with the latest information.

Difference between T2200 and T777

People often get confused about these two tax forms – T2200 and T777. The T2200 and T777 are two different forms used in the Canadian tax system for different purposes.

T2200 – Declaration of Conditions of Employment

• Purpose: The T2200 is a form used by employees to claim employment expenses on their income tax return.
• Usage: It is typically used by employees who incur expenses related to their employment that are not reimbursed by their employer, and these expenses are required as a condition of their employment.
• Completion: The T2200 is completed by the employer and outlines the specific conditions of employment that require the employee to pay certain expenses out of pocket. It confirms that the expenses are eligible for deduction.
• Examples: Eligible expenses can include home office expenses, vehicle expenses, supplies required for the job, and more.
• Importance: This form is crucial for employees to support their claims for employment expenses.

T777 – Statement of Employment Expenses:

• Purpose: The T777 is a form used by employees to report employment expenses on their income tax return. It is closely related to the T2200.
• Usage: After an employee receives a completed T2200 from their employer, they use the T777 to calculate and report their deductible employment expenses.
• Completion: The T777 is completed by the employee, and it provides a structured way to detail and calculate the eligible expenses.
• Examples: This form helps employees list and calculate expenses such as vehicle expenses, office supplies, meals, and more, based on the information provided in the T2200.
• Importance: The T777 is important for employees to accurately report their eligible employment expenses and claim the deductions they are entitled to on their tax return.

Tax forms and regulations can change over time, so you should always consult the latest guidance from the Canada Revenue Agency (CRA) or a tax professional for the most up-to-date information and instructions related to these forms and their use in the current tax year.

Employer’s role in managing T22200 form

As an employer, you are aware of the specific responsibilities and commitments you must meet in relation to your employees. When it concerns the T2200 form, you must address the question, "Is it a requirement in this employee's contract that they cover their expenses while performing their job duties?" If the answer is 'no,' then your employees cannot claim any deductions for such expenses.

Do your employees regularly work from home, use their own vehicles, or incur unreimbursed expenses as part of their job responsibilities? If the answer is 'yes,' then they may have the opportunity to deduct these expenses as employment-related costs. However, these expenses cannot be claimed as tax deductions unless you, as their employer, complete the Form T2200 Declaration of Conditions of Employment. By completing this form, you enable your employees to leverage these deductions to reduce their tax liabilities.

Content of T2200 form

The initial segment of the form contains essential employee information, such as their address, Social Insurance Number (SIN), and job title. The subsequent section necessitates the completion of details regarding the employee's day-to-day work conditions. These fundamental inquiries concerning the terms of the employee's contract determine whether they are responsible for covering their work-related expenses.

If you respond with a "no" to the first question on the form, the employee is not eligible for any deductions. However, if the answer is "yes," you must proceed to provide additional specifics in the subsequent sections.

The subsequent questions pertain to employees who are required to travel to locations outside of your primary business site. You are also required to specify the frequency of their business-related travel. This section also expects you to furnish details regarding any expenses incurred by the employee for their motor vehicle allowance or whether the company has provided them with a vehicle.

Further inquiries delve into the specifics of the employee's type of employment, including –

• Is the employee expected to rent an office or use part of their home as an office?
• Does the employee have a personal vehicle used for business purposes?
• Does the employee require a business cell phone?
• Is the possession of a power saw a mandatory requirement for the employee's job?

I worked from home during COVID – what should I do?

If you were an employee who had to work from home because of COVID-19 and incurred home office expenses, you can make use of Form T2200s, which is the "Declaration of Conditions of Employment for Working at Home Due to COVID-19." Under this form, you are eligible to claim a flat rate of up to $500 for employment-related expenses.