Employee Business Expenses

Employee Business Expenses

Did you have expenses on behalf of your job that were not reimbursed by your employer? If so, some may be deductible on your tax return if you itemize your deductions.  In order for these to be deductible, they must be qualified expenses.  Only amounts not reimbursed by your employer may be deducted.

Some examples of expenses:

  • Clothing and shoes – for these to qualify, you must only be able to wear these for your job (e.g. a uniform required by the employer, steel-toed boots, hard hats, clothing with the company’s logo). You cannot deduct suits or clothing that could be worn outside your job.
  • Dry-cleaning of and alterations for your required uniform
  • Tools required for your job
  • Professional licenses
  • Subscriptions to professional journals in your field
  • Union dues
  • Travel expenses made exclusively for your job. For more information on what qualifies as business travel, see our post ‘Family Vacations and Tax Deductions . . .”
  • Business miles – this includes miles driven over and above your commute. For example – if you spend the day in a client’s office and you drive a total of 40 miles to and from the site, and the commute to and from your office is 20 miles, you may only deduct 20 miles for that day.  It is important to keep a log of your business travel to substantiate your deduction.  You can claim either actual expenses or the standard mileage.  The standard mileage deduction for 2016 is $0.54 per mile.  For information on the mileage deduction, see IRS Topic 510 (Business Use of Car)
  • Home office – the space must only be used for your work-related activities (so if your den is used both as your home office and your family, you cannot claim the deduction. Also , you cannot claim this deduction if your company has space for you to use. For more information on the home office deduction, see the IRS article on Home Office Deduction.

You will complete Form 2106 (Employee Business Expenses) to list all unreimbursed employee expenses. The total will be entered on line 21 on Schedule A.  The amount of the deduction is limited to the amount in excess of 2% of your AGI (adjusted gross income).

As with all deductions, it is important to keep documents to support your claimed deduction.

Colleen Minnich

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