It is no news that people have been forced to stay at home due to the outbreak of the Covid-19 pandemic causing a drastic increase in the number of people working from home. Adapting to work from home might pose a little difficulty, causing you to incur unforeseeable costs carrying out your job.
The good news is that as an employee in Canada, you can claim some tax refunds, including work-related expenses that your employer did not repay during the tax year. Employment expenses are also one of these tax rebates you are entitled to claim.
Employment expenses are the costs required of employees to incur as a condition of their employment and have not been repaid by their employer. The form T777 is a form that helps you exercise the right to claim these costs.
If you need to claim certain work-related expenses, the form T777 is right for the job. This article will take you through what the form T777 entails and how to go about claiming employment expenses.
What is a T777 Form?
Also known as the Statement of Employment Expenses, the T777 form is for employees who want to claim work-related expenses that their employer did not repay. Employees must submit this form alongside the form T2200 (Declaration of Conditions of Employment).
The T2200 is provided and completed by the employer. The form outlines the expenses an employee is required to incur. This means that if an employee wasn’t required to incur costs as a condition of employment but did so, they cannot claim those expenses on the form.
If the employer has already repaid the expenses, then the form is useless to the employee. The document is a part of your income tax and benefit return.
The T777 form is in four categories:
1. Expenses
Here, you will enter all the payments you want to claim on your tax return. You will then use the form to calculate the total amount; then input it in line 22900 on your income tax return. Below are some of the costs you can claim under this section:
- Accounting fees
- Advertising and promotion costs
- Legal fees
- Meals
- Lodging
- Parking
- Entertainment
- Supplies
- Capital cost allowance
2. Allowable Motor Vehicle Expenses
In this section, you can claim any motor vehicle expenses incurred in a tax year. To claim these, you will need to provide;
- The brand
- Model
- Year of the vehicle.
You must also provide the total kilometers you drove within a tax year. You can claim the following expenses under this section:
- Fuel
- Maintenance
- Repair
- License
- Registration
- Insurance
- Interest
- Leasing
- Capital cost allowance
3. Workspace-in-the-home Expenses
This section is for taxpayers working from home. If you’re working from home or using a part of your house as an office, you can claim any expenses incurred while working from home. You can do this using lines 17 to 25 on the T777 form.
If you meet any of the following conditions below, you can deduct expenses you paid for using a workspace in your home for employment purposes;
- The workspace is where you work mainly (more than 50% of the time)
- You use the workspace only for your work purposes.
- Space is also being used for regular work meetings with clients and customers as your employment duty.
The expenses you can claim in this section include the following:
- Electricity
- Heat and water
- Insurance
- Maintenance
- Property taxes
In this section, you can also add the cost from previous tax years or project cost for future tax years.
4. Capital Cost Allowance
This section allows you to claim part of the cost for specific equipment if you used them to earn income for your employer. It is also known as depreciation and capital cost allowance.
You can claim expenses for equipment like a guitar, motor vehicle, and other eligible instruments. This section lets you get a refund for the depreciating value of your asset. It is sectioned into two – the first for classes 8, 10, 54, and 55, while the other for 10.1.
Who Is Eligible To Fill The T777?
If your employer expects you to incur any cost to aid your workflow during a tax year, and your employer has not repaid them, you can claim those expenses using the T777 form. Note that not all employees can use this form. To be able to fill out the form, you must have the following:
- Incurred costs required as a condition of employment or;
- Not been reimbursed for the expenses/employer not planning to repay them
The form is available on the CRA’s official website.
What Expenses are Eligible under T777?
The eligible expenses under T777 differ depending on the type of employee you are and the industry you are employed in.
For commission workers, the eligible expenses include the following;
- Accounting and legal fees
- Advertising and Promotion
- Food, beverages, and entertainment
- Lodging
- Parking costs
- Supplies
- Other expenses such as licenses, travel fare, equipment, etc
For salary earners, the eligible expenses are;
- Accounting and legal fees
- Allowable motor vehicle expenses, including capital cost allowance
- Traveling expenses
- Parking costs
- Supplies
- Other expenses like salary, office rent, long-distance calls, etc
Note: parking costs should be entered in the “Parking” line on your form and not under allowable motor vehicle expenses.
- Commission workers and salary earners
For Commission workers and salary earners, your employment expenses are any GST (Goods and Services Tax) and PST (Provincial Sales Tax) or HST (Harmonized Sales Tax) you paid on your payments. You may also get a rebate of the GST/HST you paid for.
- Transportation Workers
For transportation workers, the expenses include meals, lodging and shower, and trips outside your jurisdictions.
There are eligible expenses for employed artists, which include capital cost allowance. Also, employers working in forestry operations have their qualified expenses. To find out more about the eligible costs, check this guide.
It is advisable to keep all of your records as evidence for your claim with a form T2200.
How to Fill The T777
You can fill in the T777 by downloading the PDF version and printing it or the PDF fillable version. You can also fill it out and submit it online using the Canada Revenue Agency (CRA) EFILE and NETFILE.
Form T777s and T2200s
If you worked from home for more than 50% of the time for at least four weeks in a row in 2020 due to COVID-19, and you incurred expenses directly related to work, you can claim home expenses alone.
You will need to fill out the form T777S (Statement of Employment Expenses for Working at Home due to COVID-19) instead of the usual form T777. You will then submit it with form T2200S (Declaration of Conditions of Employment for Working at Home due to COVID-19) in place of the standard form T2200.
Note that you won’t be able to claim home expenses if all of your costs have been repaid or your employer plans to refund you. Below is the list of home expenses you can claim;
- Rent for your house or apartment
- Utility fees (if you live in a condominium)
- Home internet access fee
- Supplies
- Long-distance calls for work-related purposes
- Cellphone service plan
As a commission employer, you can also claim;
- Property taxes
- Insurance for your home
- Lease of a cell phone, computer, laptop, tablet, etc.
Expenses You Cannot Claim
You cannot claim the following expenses under T2200s
- Capital cost allowance
- Interest on your mortgage
- Principal mortgage payments
- Home internet connection fees or fees related to the lease of a router
- Furniture
- Electronic appliances
- Office equipment
- Computer accessories
- Purchase of a gadget or device
- Cell phone connection or license fee
- Capital expenses like flooring, furniture replacement
- Standard monthly rate for a landline phone
You will use the form T777S to calculate the expenses you can deduct and enter the total amount on line 22900 on your income tax and benefit return. You should also include the form in your tax return.
Deductible Expenses
You can calculate the deductible expenses in any of the following ways:
- Temporary flat rate method
- Detailed method
The CRA has introduced a temporary flat rate method for calculating home-office expenses for employees that worked from home in 2020 due to COVID-19 and have not been reimbursed for the costs incurred. This way, you won’t require a T2200S from your employer or a T2200 (for other expenses besides home-office expenses).
The flat rate method allows you to claim $2 for each day you worked at home in the four weeks plus other days you worked at home due to COVID-19. It, however, only allows you to claim up to a maximum of $400.
If you want to use this method, you will enter your claim on line 9939 of the form and line 22900 of your tax return.
If you’re using the detailed method, your employer will be required to fill out the T2200S. You will also be required to keep documents to support your claim. You can use this guide to calculate your expenses in a detailed way or get more information on the T777 and the T77S, eligibility, and capital cost allowance.
Conclusion
The T777 form is very beneficial for helping employees claim their deserved rebates. It ensures that employers are not being cheated and employers are accountable for fulfilling their employees’ rights.
