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Employee Business Expenses

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Related

  • Form 2106 - Employee Business Expenses
  • Tax Topic 514 - Employee Business Expenses

If you itemize deductions and are an employee, you may be able to deduct certain work-related expenses.

Only employee business expenses that are in excess of 2% of your adjusted gross income (AGI) can be deducted.

Qualifying Business Expenses

Expenses that qualify for an itemized deduction include:

  • Business travel expenses
  • Business use of car
  • Business entertainment expenses
  • Business use of your home
  • Work-related educational expenses
  • Miscellaneous employee expenses

You must keep records to prove the business expenses you deduct.

If the plan under which you are reimbursed by your employer is non-accountable, you must include the expenses, but you can take a deduction for them.

If your employer gave you reimbursements under an accountable plan, you need not  include the payments in your gross income, but you cannot take a deduction for the payments you received in relation to the expenses.

An accountable plan must meet three requirements:

  • You must have incurred the expenses while performing services as an employee.
  • You must adequately account to your employer for these expenses in a reasonable period of time.
  • You must return any excess reimbursements or allowances within a reasonable period of time.

Report employee business expenses on Form 2106 - Employee Business Expenses. This form flows to Schedule A - Itemized Deductions.

For more information see IRS Tax Topic 514 - Employee Business Expenses.

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