T2200 shows the $10K in commissions and checkmarks that employee was required to use home office 100% of the time and also that they had to be away for atleast 12 consecutive hours from their place of work.
Question 4 shows that employer paid/reimbursed them $45K upon proof of payment for expenses and this was NOT included in the T4.
Can I still use this T2200 to claim home office and vehicle expenses or does the $45K cancel any chance of claiming employment expenses. I asked for more info on the $45K or to confirm it was correct and it is confirmed as correct.
If a portion of the monies were for home office expenses, then that portion must be deducted from actual expenses before one can claim it.
The taxpayer being away for 12 hours… I would inquire what this is about.
If it was a week at a trade show great… but if they are on the road salesperson… they may not be able to claim home office as the two contradict each other.
You must report the $45k on the T777. If the actual expenses (being reported on the T777) were more than $45k, the taxpayer will have a deduction. If the $45k was more than the actual expenses, the excess will have to be reported as income. In that case, the employer should have reported the excess on the T4 and withheld source deductions.
This doesn’t sound right, @Nezzer.
Entries on the T777 become a deduction from income - there is no place on the T777 that I can see where you can record it and it gets added to income.
What I’ve done in the past in situations where the employee received a per km allowance but vehicle expenses were larger than the per km money received, I’ve added the per km allowance to income on the T4 slip (same line as TIP income at bottom of T4 slip in TaxCycle), then claimed employment deductions as normal.
I think this is what you are suggesting be done with this $45K, to add it to the T4 slip to be added as income. However this too doesn’t sound right as the employee won’t recoup $45K by claiming business use of homes and vehicle expenses combined! You’ll be adding extra income for the employee to be taxed on.
I’m wondering if the 45K was used to purchase products for the business unrelated to Business Use of Homes or the employee’s vehicle expenses. My hunch is these products, with a total price tag of $45K, were fully for the business and thus fully reimbursed. Much like the way that I purchase products for my tax business using my personally credit card, like office supplies, software licenses, etc, and because it’s on my credit card and then reimbursed by my business, it gets recorded on my T2200 form as fully reimbursed, and have nothing to do with my personal vehicle expenses or bus use of homes.
This is why you need to ask your client what that expense and reimbursement was for to truly understand if it needs reporting, and if reported, will your expenses be greater than the amount reported.
You are correct - it doesn’t “get added” to income from the T777. I wasn’t suggesting that. But, if your employer “reimbursed” you for expenses which you didn’t actual incur, then what was that money for? It must have been employment compensation, which, per the law, should be reported on a T4 slip. If you (as the tax preparer) want to enter the excess amount on the T4 “slip page” in TaxCycle - I guess that works. Alternatively, you could enter it on the Other income worksheet.
However, in the initial post by @wachproperties this shouldn’t be a concern, because he says: “…it is confirmed correct…” (I assume that means the employer actually saw the expense receipts and reimbursed only those that were legitimate.)
I think CRA should hold employers accountable for paying out amounts as “expense reimbursement” if those expenses don’t exist, but I haven’t seen any cases where CRA actually went after the employer as such.
Great explanation, thank you. I will keep digging. This is a US based company so they are not used to filling out these T2200s correctly and its like pulling teeth understanding how much of the reimbursement covers home expenses (doesn’t see like any) and vehicle expenses (a portion likely covered these)