- A self-employed person deducts business expenses against business income on Schedule T2125, with a fairly broad list of eligible categories tied to running a business.
- Before you can claim most employee expenses, your employer must complete and give you Form T2200, Declaration of Conditions of Employment (or, in some cases, a simplified version the CRA…
- Depending on your specific employment conditions, T777 may allow you to claim: - Supplies you were required to provide yourself and used directly in your work - A portion of home-office…
If you're a regular employee — not self-employed — and you've paid for things out of pocket to do your job, you might assume you can deduct them the same way a freelancer deducts business expenses. You can't, or at least not nearly as broadly. The employee expense deductions available through Form T777 are narrower, tied to your employment contract, and require your employer's cooperation before you can claim anything at all.
Confusing the employee rules with the self-employed rules is one of the most common mistakes people make when they've moved between contract and salaried work, or when they hold both types of income in the same year.
This guide breaks down what T777 actually lets an employee claim, why your employer's signature matters, and how the rules differ from what a self-employed person can deduct.
Employees vs. the Self-Employed: Different Deduction Rules Entirely
A self-employed person deducts business expenses against business income on Schedule T2125, with a fairly broad list of eligible categories tied to running a business. An employee deducts a much narrower set of expenses on Form T777, and only if their employment contract required them to pay for those things — and their employer confirms that requirement in writing.
This distinction matters most for people who shift between employment types, or who have side self-employment income alongside a T4 job: the two forms, and the two sets of rules, don't blend together.
The T2200 Requirement: Why Your Employer Has to Sign Off
Before you can claim most employee expenses, your employer must complete and give you Form T2200, Declaration of Conditions of Employment (or, in some cases, a simplified version the CRA has permitted for specific circumstances). This form confirms your job required you to pay these expenses yourself and that you weren't fully reimbursed. Without it, the CRA can deny the claim outright, regardless of how legitimate the expense was.
If your employer is reluctant to sign a T2200, that's worth raising directly with them — it's a statement about the conditions of your job, not a financial commitment on their part.
What You Can (and Can't) Deduct as an Employee
Depending on your specific employment conditions, T777 may allow you to claim:
- Supplies you were required to provide yourself and used directly in your work
- A portion of home-office costs, if your employer required you to work from home and you meet the eligibility conditions
- Certain travel expenses required by your job and not reimbursed
- Motor vehicle expenses, if travel is a required part of your role, supported by detailed logbook records
Employees generally cannot deduct mortgage interest, capital cost allowance on their home, or the broader list of ownership-related costs that a self-employed person may be able to claim under the home-office rules. The exact list also differs somewhat between salaried and commissioned employees — check which category applies to you.
Home Office: Employee Rules vs. Self-Employed Rules
| Employee (T777) | Self-employed (T2125) | |
|---|---|---|
| Requires employer confirmation | Yes (T2200) | No |
| Can deduct mortgage interest | No | Sometimes, as a proportionate home-office expense |
| Can deduct capital cost allowance on the home | No | Generally avoided even when technically possible |
| Deduction limited by income earned | Yes, in relevant categories | Yes — cannot create or increase a loss |
Keeping Records That Survive a Review
The CRA reviews employee expense claims regularly, and the burden is on you to support what you claimed. Keep:
- [ ] Your signed T2200 (or its accepted simplified equivalent) for the relevant year
- [ ] Receipts for every expense claimed
- [ ] A logbook, if claiming vehicle expenses, showing business versus personal use
- [ ] Any written policy from your employer describing what you were required to pay for yourself
Frequently asked questions
My employer won't give me a T2200 — can I still claim my expenses?
Generally, no. Without the T2200, or an accepted simplified alternative for your circumstances, the CRA can deny an employee expense claim even if the expenses were real and job-related.
I work from home sometimes by choice, not because my employer requires it. Can I still claim home office costs?
Generally no — the requirement typically has to come from your employer, not simply your own preference to work remotely some of the time. Check the current conditions carefully, as they've shifted over recent years.
Can commissioned employees claim different things than salaried employees?
Yes — commissioned employees have historically had access to a somewhat broader list of deductible expenses than salaried employees, reflecting the nature of commission-based work. Confirm which category applies to your role.
If I have both a T4 job and self-employment income, do I use one form or both?
Both, generally — you'd use T777 for eligible employee expenses against your employment income and T2125 for business expenses against your self-employment income. The two aren't interchangeable or combinable.
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