Tax Lesson 8 YOURLOGO Start Lecture Note: This screen has no script. Static page. YOURLOGO Start Lecture

Deductions from Employment Income An employee can deduct some expenses incurred to earn employment income (as long as they do not receive a reimbursement from their employer) for such things as work travel expenses, automobile expenses (used in employment duties), professional dues and union dues A commissioned salesperson can deduct reasonable selling expenses (including 50% of meals and entertainment incurred to earn income) paid in the year. The deduction will be limited to commission income An employee can deduct home office expenses but only if the home office is: the place where the individual principally performs his/her work duties; or used exclusively for work purposes and the employee regularly meets customers there The home office expense cannot create or increase a loss from employment income. Any un-deducted home office expense can be carried forward (subject to the same restrictions) Employees who are not commissioned salespersons cannot deduct mortgage interest, property tax or insurance Commissioned salespersons cannot deduct mortgage interest (they can deduct property tax and insurance for the home office)

Deductions from Employment Income (cont) Note: a home office expense can also be claimed by taxpayers earning business income (subject to similar restrictions as for employees, except the self-employed can also deduct mortgage interest, property tax and insurance for the home office. The self-employed can deduct CCA on the home office but should not due to the principal residence rules, discussed later)

Spousal and Child Support Spousal support payments made in the year are deductible from income and any spousal support payments received in the year are included in income Child support payments made are not deductible and child support payments received are not included in income (they are personal expenses)