Tips for Claiming Job-Related Expenses

When it comes to earning a living, sometimes it really does take money to make money. If your job requires you to travel, maintain a home office, or pay for your own tools, you may be able to recover some of those costs at tax time. Even if you don’t have any out-of-pocket expenses, your job could give you a tax break.

The Canada Employment Amount Tax Credit

As the name implies, the Canada Employment Amount is a Non-Refundable Tax Credit for people who are employed. If you worked for an employer, it’s yours for the claiming. This credit is designed to cover everyday expenses associated with having a job – the drive to work, the cost of your uniform, etc. The great thing about this credit is that you don’t actually have to incur expenses. It’s automatically yours if you earned employment income!

How much can I claim for the Canada Employment Amount?

The maximum amount of the credit, for the 2024 tax year is $1,433. The base amount of $1,000 began in 2007 and has increased slightly each year as it was indexed for inflation.

How much of that you can claim depends on the following:

• As long as your employment earnings equal more than the value of the credit, you can claim the full amount.
• If you earned less, you’re capped by your total employment income.

For example, if you only earned $500 through employment last year, you’ll only claim $500 on Line 31260 – Canada Employment Amount of your Income Tax and Benefit Return.

Claiming Other Employment Expenses

If you have out-of-pocket expenses associated with your job, you may be able to claim more than just the Canada Employment Amount.

In certain situations, employees are required to incur extra costs as part of the position. Long-haul truckers, commission employees who travel away from the office regularly, and work-from-home employees all spend money to make money.

To claim other employment expenses, you, the employee, must have a Form T2200 Declaration of Conditions of Employment completed and signed by your employer. Only the items listed on the form may be claimed and it’s up to you, the employee, to keep track of your employment expenses for tax time.

Can I claim expenses reimbursed by my employer?

If your employer reimburses you for your expenses and includes the reimbursement as taxable income on your  T4 – Statement of Remuneration Paid, you can claim employment expenses. You’re paying tax on that reimbursement so it makes sense to claim the offsetting expenses.

If you are reimbursed or receive an allowance for your employment expenses that isn’t included in your taxable income, you will not be able to claim employment expenses. This commonly happens when an employer gives you a monthly allowance or reimburses you dollar-for-dollar for expenses which you hand receipts in for. These benefits and allowances need to be shown in Box 40 of your T4 slip in order for you to claim the deduction.

• The only exception to this rule is if your allowance doesn’t cover the actual cost. For example, imagine you are required to use your vehicle as part of your job. Your employer gives you an allowance of $.20/km and the allowance isn’t included on your T4. The allowance is rather low compared to the actual cost of gasoline, etc. If you have a signed T2200 and can prove your expenses were significantly more than the allowance, you can claim the actual amount of the expense. It’s important to point out that if you choose to claim the expenses on your tax return, you must also include the allowance you were given in your income.

Common Employment Expenses

If, as part of the conditions of your employment, you were required to pay any of the following expenses, you may be eligible to claim other employment expenses:

• Vehicle expenses including fuel, maintenance & repairs, and insurance.
• Tradesperson’s tools such as power saws for forestry workers, mechanic’s tools, etc.
• Workspace-in-the-home costs such as internet, electricity, heat, etc. if your job requires you to maintain a home office.
• Advertising costs for commission employees.

Most employees cannot claim other employment expenses. Even if your commute to work is 2 hours each way, because you’re not required to travel as part of the job itself, you cannot claim the expense of the commute.

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