If you’re an employee who works from home (and not due to COVID-19) and hope to deduct work expenses, you’ll absolutely need your employer to provide Form T2200. This quick guide will provide all the essential information on forms T2200 and T2200S you’ll need.
Tax form T2200 explained
Form T2200 is provided by your employer and allows you to claim expenses you incur to perform your job, such as your home office, cell phone, car, professional advice, and other employment expenses.
But driving your car to the office every day and occasionally tapping out some work emails at your dining room table won’t get you a T2200, or, for that matter, a justification for a tax deduction on your car payment or rent from the Canada Revenue Agency (CRA). T2200 forms are sent to a very specific subset of workers who wouldn’t be able to do their jobs unless they take on the financial burden of specific unreimbursed expenses.
Form T2200, a three-page document that bears the title, “Declaration of Conditions of Employment,” is likely familiar to people who travel a lot for their jobs. In the world of expense deduction, the self-employed and business owners have many deductible expenses at their disposal, whereas salaried employees are more limited and must get a T2200 if they want to deduct certain expenses. (Jobs and “gigs” sometimes can seem similar, so the CRA actually created a pamphlet specifically to help you understand whether you are technically an employee or self-employed.)
Unless you are an employer, you likely won’t need to fill out the T2200 yourself. It’s something that most employers will complete automatically and deliver to you. Unlike, say, T4s which are filed with your income taxes, T2200s will only be provided to you, the employee.
Note that the Canada Revenue Agency won’t receive a copy of it. This doesn’t mean it’s not important. So if you receive a T2200, keep it in a safe, easily-accessed place. It’s one of those things that you’ll need if and when the CRA comes knocking for any supporting documentation based on your submitted tax return.
Possession of form T2200 opens the door for you to fill out form T777, which is where you’ll itemize your various deductible expenses. Unlike the T2200, you are required to send a completed copy of the T777 to the Canada Revenue Agency.
How important are T2200 forms? Super important, as illustrated by the tax saga of one Toronto worker, reported on by The Financial Post. The Canada Revenue Agency denied $4,013 of business-related expenses claimed by a film-industry lighting technician. The rejection left him so outraged that he went to court where a judge asked him to produce a T2200, which he didn’t have. The judge ruled that because his employer hadn’t sent him a T2200, and wasn’t required to for the kind of job he held, the fact that he didn’t get one was “fatal.”
If you are an employee and think that you might be entitled to deductions but did not receive a T2200, you may first want to review the CRA’s publication 4044, which provides a primer on what’s deductible and what’s not. (No, that $5,000 Brioni jacket is not deductible as “protective clothing.”)
If, after you acquaint yourself with the guidelines and feel you are entitled to a T2200 from your employer, reach out to your company’s human resources department.
What’s in the T2200
Besides an employee’s name, address, and social insurance number, the T2200 features just 13 questions. The most basic but important one indicates whether the employee is allowed to claim anything: “Did this employee’s contract require them to pay their own expenses while carrying out the duties of employment?” An answer of “no” to this question means the employee won’t be able to deduct any expenses at all.
Other questions ask whether the employee must travel to places other than the office as part of her job. Does the employee need to rent an office? Have a car? A business cell phone? Use part of their home as an office? Need to own a power saw? (A couple of the questions are quite specific.)
What to be careful about
Item 9 on the T2200 asks if the employer has reimbursed the employee for any expenses and how much. It’s especially important when completing your taxes that the amount the employer reimbursed you not be included in your deductible expenses. Claiming reimbursed expenses as a deduction is not allowed by the CRA.
Allowable expenses
There’s a very long list of deductible expenses, some as narrow as “musical instrument expenses.” Have a look at this T777 info to get the full picture of what might appear on your T2200.
The big ones that most T777 filers will be concerned with are automobile expenses, work-related entertaining, and office rent (or a portion of your total home expenses if you work from home regularly). Most queries you might have about home offices are covered in the CRA’s guide, “Work-space-in-the-home expenses.”
