Employees

Posts

The T2200 form is a document for those who work from home and wish to claim home office expenses on their taxes. This form, also known as the “Declaration of Conditions of Employment”, allows employees to detail their work-from-home situation and claim expenses such as utilities, internet, office supplies, and home office furniture.

Breaking down Tax Form T2200

With the rise of remote work and the increasing number of employees working from home, the T2200 form has become more relevant than ever. It is important for individuals to accurately fill out this form to ensure that they are claiming the appropriate expenses and complying with government regulations.

Richardson Miller LLC is here to share the specifics of the T2200 form for the 2023 tax season, what expenses can be claimed, and how to properly fill it out to maximize your tax return Understanding this form is vital for anyone who works from home and wants to make the most of their tax deductions.

What is the T2200 tax form used for?

Employees use the T2200 tax form to claim deductions for expenses that their employer did not reimburse. This form is required for individuals who incur expenses related to conditions of employment for working, such as vehicle expenses, supplies, and home office expenses.

By completing the T2200 form for the 2023 tax year, employees can deduct these expenses from their taxable income, ultimately reducing the amount of income tax they owe to the government.

One important thing to note is that not all employees are eligible to claim deductions using the T2200 form. Only employees who are required to work from home or use their own vehicle for work-related purposes can claim these deductions. Employees must keep detailed records of their expenses in order to accurately complete the T2200 form and support their deductions if requested by the Canada Revenue Agency (CRA).

Employers are also required to complete certain sections of the T2200 form, confirming that the expenses claimed by the employee are valid and were not reimbursed. This form helps to ensure that employees are claiming legitimate expenses and prevents any potential abuse of the tax system.

Content of Form T2200

In order to complete T2200s accurately, there are several pieces of information are needed to complete it:

  1. The form requires the name and address of the employee for whom the form is being completed. This information helps to identify the individual to whom the form pertains.
  2. The employer’s business number must be provided on the form. This number is used to link the form to the specific employer.
  3. Details about the employment arrangement are also included, such as whether the employee was required to work from home or incur expenses related to their job, Which are necessary for the completion of the form.
  4. A breakdown of the expenses incurred by the employee, including details about the nature of the expenses and the amounts that were paid out of pocket are required.

Here’s an example of how expenses can be claimed:

Andrew works for a company that sells video equipment and meets the employment conditions. During 2023, he recorded the following information:

Income

Salary received: $45,000
Commissions received: $5,000
Total employment income: $50,000

Expenses

Advertising and promotion: $1,000
Travelling expenses: $6,000
Capital cost allowance: $1,500
Interest on car loan: $5000
Total expenses: $9,000

Andrew’s total expenses of $9,000 are more than his commissions of $5,000. Therefore, his claim for expenses is limited to $5,000 plus the CCA of $1,500 and interest of $500, for a total claim of $7,000. However, he could choose to claim expenses as a salaried employee, in which case he could claim the travelling expenses of $6,000, but not the advertising and promotion expenses. Using this method, Andrew also claims the CCA of $1,500 and interest of $500, for a total claim of $8,000.

source: canada.ca

‍What Can I Deduct with the T2200 Form?

With the T2200s, individuals can deduct expenses such as office supplies, cell phone bills, internet expenses, and home office expenses. To be eligible for these deductions, employees must have incurred these expenses as a requirement of their employment for working at home and have a completed and signed T2200 document from their employer.

  • Office supplies such as pens, paper, and folders can be deducted if they are purchased for work purposes.
  • Cell phone bills can be partially deductible if the phone is used for work-related calls.
  • Internet expenses can also be deducted if the internet is used for work purposes.
  • Home expenses such as utilities, rent, and home office furniture can be deducted if a portion of the home is used exclusively for work.

What’s the difference between T2200 and T777?

When it comes to tax forms in Canada, it’s important to understand the differences between T2200 and T777. The T2200 form is a Declaration of Conditions of Employment, which is completed by employees who need to claim employment expenses.

On the other hand, the T777 form is used by individuals who need to claim deductions for work space-in-the-home expenses. Both forms play are important in determining the amount of tax deductions an individual is eligible for, but they serve different purposes and require different information to be filled out accurately.

The T2200 form, usually given by employers, verifies that an employee must work from home or cover other job-related costs. The T777 form is completed by the employee to outline the expenses incurred while working from home.

Individuals must distinguish between these forms to claim deductions accurately and prevent any complications with the Canada Revenue Agency.

Resources for employers in completing Form T2200

To help employers with this process, there are several resources available. These resources may include online guides provided by the government, tax preparation software that can assist with filling out the form, or even consulting with a tax professional for guidance. Employers need to familiarize themselves with the requirements of Form T2200 and gather all the necessary information before completing the form.

Employers should ensure that all the information provided on the form is accurate and up to date. Any mistakes or incorrect information could result in delays in processing the employee’s claim or even potential audits by the Canada Revenue Agency. By utilizing available resources and taking the time to properly complete Form T2200, employers can help their employees take advantage of available deductions and avoid any issues with their tax filings.

Covid Holiday Parties

How does Covid-19 Impact Your Company Holiday Plans?

December 2020 corporate celebrations will be drastically different than previous years. Would you typically host a party for your staff and their spouses?

These types of events are either going to be:

1. Illegal due to size restrictions, or
2. Not a wise business decision if your entire staff end up in quarantine because of exposure.

I believe that holiday celebrations (in some form) help contribute to the culture of your organization. These events help your staff to feel appreciated and offer an opportunity to create bonds (aka loyalty) to others in the group. If you needed another reason, holiday staff parties are 100% deductible for tax purposes. Canada Revenue Agency permits up to six of these 100% deductible events annually where all staff are invited. Normally, meals and entertainment are only 50% deductible for tax purposes.

If you can’t meet in person in the tradition sense, what are your options? It’s time to get creative. Here are some of my favorite ideas:

Virtual tasting experiences
There is a chocolatier in Edmonton that will deliver their product to you at home and then lead a private online tasting event for small groups. Several local businesses are offering such services for their products.

Skip the Dishes/online gaming
Have dinner delivered to your employees’ home and host a Jackbox party.

Online cooking classes
The ingredients and recipes are delivered to your employees’ home and the culinary instructor leads an interactive online cooking class. This could be a fun “date night” for your employee and their spouse.

Socially distanced experiences
Some hotels/restaurants are getting creative with offering Covid-19 friendly activities. While you still need to follow local Covid-19 protocols, one particular hotel I know of is offering a package that includes a three course meal (a separate table for each couple), dancing lessons (participants keep in their designated square in the ballroom), and a night at the hotel. With travel restrictions still tight, hotels are suffering and would probably be open to suggestions if you came up with a similar idea for a private function. I think that these types of events will become more common with people craving a unique staycation.

The holiday season is fast approaching. With 2020 providing us ample opportunity for re-evaluating our values and priorities, have your corporate holiday plans changed? What are your plans for gifting to your employees?

Here are the rules:

  • Canada Revenue Agency allows you to give your employees gifts costing up to $500 annually without tax consequence to your employee. This could include a birthday gift, a gift for the birth of a child, holiday season, etc. It’s worth noting that small items such as coffee mugs, the clothing with your company logo on it, coffee and tea don’t count toward this $500 total. If your gifting exceeds the $500 limit, the overage is a taxable benefit to your employee. A $700 annual gift would result in a $200 taxable benefit for your employee.
  • Cash and gift certificates are considered to be a form of compensation that results in a taxable benefit to your employee. While our employees may enjoy the freedom of cash stuffed in a Christmas card, they would likely prefer if they didn’t have to pay tax on a gift. With gifting cash, there is the added possibility of a denied deduction as there is zero proof of where the cash went.
  • Event tickets or vouchers qualify as non-taxable benefits as they are redeemable for a specific thing. For example, a voucher that entitles you to a Widget at XYZ Store doesn’t offer much choice to the recipient and therefore qualifies as a gift. Now that we know the parameters, the big challenge is to come up with thoughtful, creative and non-taxable gift ideas. Think about what your employees stress about. What gift can make their lives just a little bit better?

Meal subscriptions
Let’s be honest. Deciding what to have for dinner is the absolute worst part of adulting. Imagine taking a bag of ingredients out of the fridge and simply following the step by step recipe to create a decent meal. THIS is far more relaxing to me than a spa treatment. We’re talking ONGOING stress relieve here!

House cleaning service voucher
This one speaks for itself.

Online cooking class/or tasting experience voucher
Many folks are craving “date night” with their significant other. With Covid-19 restrictions (travel, social outings), many couples are struggling to find opportunities to reconnect. Here is a great Covid-19 protocol compliant date night.

Subscription to a (cool product) of the month club
People like receiving mail that isn’t a bill. It’s a gift that keeps on giving!

Support local
Check out some locally crafted gifts/experiences. Support a small to medium business in your own back yard. The Greater Edmonton Area has some fantastic:

  • Craft Breweries
  • Distilleries
  • Chocolatiers
  • Ciders
  • Cookies
  • Jewelers and crafters
  • Woodworkers
  • Artists
  • Olive oils, sauces, spice blend merchants
  • Soaps and lotions
  • Many many more.

If you’re struggling to come up with a brilliant idea, you could always ask your employees for input. Small to medium business owner-operators often know their employees really well. If this is the case, ask them what they’d like. Perhaps you could give them a budget and a catalog/website to peruse. This would take some of the gifting stress off of your shoulders; the employee receives a non-taxable gift that they actually want and you get a deduction for tax purposes. Win, win, and win.

Taxable versus non-taxable benefits can be difficult to sort out. If you have got any questions about how to show your appreciation to your staff, feel free to reach out. We’re always happy to help!