Who has to complete a T777 tax form?
The form T777, Statement of Employment Expenses, is meant for certain commission employees, certain salaried employees, and some truck drivers. In some cases, railway and other transportation employees, employees working in forestry operations, employed artists, or employed tradesperson can claim employment expenses as well.
Under what conditions can employees use it?
In general, you have to pay for those expenses as a condition of employment and not be reimbursed. If you work from home, you have to use the space only for your work. In all cases, your employer must provide you with a completed T2200 form which should indicate which expenses you were required to pay.
Are there other advantages?
Yes. You may be eligible for the Employee GST/HST Rebate. If the expenses you are claiming included the GST or the HST, and your employer is registered for GST/HST, complete the GST370 tax form and claim the rebate on line 45700 of your return.
For more detailed information about eligibility, consult CRA Guide T4044, Employment Expenses.
How are the eligible expenses calculated?
CRA has set a list of eligible expenses that can be claimed under the employment expenses deductions such as legal fees, meals, motor vehicles, travel expenses, and others as mentioned in this link.
The T777 form is used to calculate how much of these expenses can be claimed when filing taxes.
Expenses:
List all expenses that you incurred to earn income. The use of a home office and the motor vehicle expenses should be calculated in the following sections before adding them to this expenses section. You can only claim expenses that are approved by your employer in the T2200 form.
Calculation of allowable motor vehicle expenses:
You should keep a logbook of your vehicle’s odometer readings. In this section you will break down the kilometers into business use and personal use:
Business use portion = kilometers you drove to earn employment / total kilometers you drove in the tax year
Your allowable vehicle expenses = the total expenses you paid in the tax year x business use portion
Calculation of work space-in-the-home expenses:
Similar to the vehicle expenses, you are allowed to deduct home expenses with respect to the working area only. The form required to calculate the personal use portion of the expenses then subtract it from the total expenses:
Personal use portion = home space for personal use / total home space
Allowable home expenses = total expenses – (personal use portion x total expenses)
For example;
Your house has 6 rooms in total, and you use one room as an office:
Personal use portion = 5/6
You spent $5,000 on eligible house expenses in the tax year:
Allowable home expenses = $5,000 – (5/6 x $5,000) = $833.33
Capital cost allowance:
Capital cost allowance (CCA) is the amount of amortization expense that the government will allow a company to deduct from its income for tax reporting purposes. The rules are clearly set by the Canada Revenue Agency (CRA) and must be strictly followed. If you own your vehicle, you can deduct the depreciation value of the vehicle but not the whole cost. This depreciation is called the Capital Cost Allowance (CCA). Similarly, if you were required to buy tools or equipment to earn income, you deduct CCA instead of the full cost.
In this section of the form, you will need to list all the tools, equipment, and vehicles in the CCA table to calculate the depreciation values. For vehicles CCA, you can add class 10 in one row if you have more than one vehicle, but list class 10.1 in different rows for different vehicles.
Salaried and commissioned employees who reside in Quebec should complete the TP-59-V form to claim the expenses.
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