Taxes and Your Job – Deductible Job Expenses
For some occupations, there are certain expenses for the employee, but many of the expenses are tax deductible. Some of the expenses are necessary in order to do the job, such as the gas you buy to go from job site to job site, the tools you buy, or the uniforms you have to purchase. The good news is that you may be able to deduct some of those expenses from your tax return if you meet the requirements.
Where to Claim Employee Business Expenses
On-the-job expenses are called employee business expenses, and they're deductible if you paid them yourself, and you were not reimbursed for them by your employer.
- You can only claim these expenses if you itemize deductions.
- Your deduction is limited to the amount of expenses that exceed 2 percent of your adjusted gross income.
Now, where to claim these expenses? When you do your taxes with 1040.com, you can enter your expenses in two different places:
- The Job, Tax Preparation and Other Expenses screen is your first stop, since it's the simplest. This screen may be all you need if you're just claiming a few expenses, such as a certain amount for union dues or uniforms.
- If your expenses are more detailed, or if you have vehicle expenses, use Form 2106 – Employee Business Expense.
Quite a bit, actually:
- Work tools and equipment
- Work clothes and uniforms
- Electronics such as cell phones, tablets and computers, if they're used for work
- Union and trade association dues
- Subscriptions to work-related professional journals and other publications
- Job search expenses (if you’re seeking within your current profession)
- Education costs to maintain or improve current skills
If you are reimbursed for your job-related expenses by your employer under an “accountable plan” system that requires you to submit your receipts or other documentation, then you cannot write off those expenses and the reimbursement is not taxable. If the plan does not meet the IRS criteria, then the reimbursement is taxable – but you may deduct the expense as if you had not been reimbursed. Publication 463, Travel, Entertainment, Gift and Car Expenses has all the rules.
Form 2106 or Form 2106-EZ?
Form 2106 is used to report unreimbursed employee expense. But sometimes our circumstances mean we can use something shorter. That’s when the Form 2106-EZ comes in.
The IRS says you can use the shorter, easier 2106-EZ when:
- You are an employee deducting expenses attributable to your job.
- You were not reimbursed by your employer for your expenses (box 1 of your Form W-2 is not considered to include reimbursements).
- If you are claiming car expenses, you use the standard mileage rate.
When you do your taxes with 1040.com, we can take care of the choosing for you, and automatically use the form that best suits your needs. If you had employer reimbursement for expenses, for example, we’ll use the standard Form 2106. Otherwise, you’ll get the EZ form.