A Digest to Work-Expense Reimbursement:
Obstacles to Deduction
It is possible to deduct most unreimbursed employee expenses but to claim them on IRS Form 2106 or 2106-EZ you need to itemize the deductions. Whereas it is possible to deduct just the piece of your work-related expenses exceeding the IRS limit of 2 percent of adjusted gross income. Also, in case your 1040 conveys that you are supposed to pay the alternative minimum tax (AMT), then you can’t avail work-related deductions.
Although the employee may well ask the employer to turn the expense reimbursable while adjusting the sales commission and the company can then obtain the tax deduction and allocate the savings with the employee.
Costs You May Deduct
Transportation and Travel: At times measured as unreimbursed costs and so is deductible. For instance, travel costs can’t be claimed, still the expense of going from a job with one employer to a second job with another is deductible. The per-mile reimbursement rate differs depending on the activity.
Meals and Entertainment: They could be deductible but just at half the real cost, and that too calls for fussy records to be available, incurred when you were with colleagues or clients discussing business affairs.
A Computer or Home Office: Given that they are used entirely for work, may stand to be deductible.
Union and Professional Dues, and Work-Related Licenses, Legal Fees and Medical Examinations
Uniforms, Tools, Supplies and Magazine Subscriptions: They may be subtracted if these are not reimbursed by the employer.
Work-Related Educational Expenses: Deductible if the curriculum is vital for your work/employer or assists you advance your qualifications in your current domain.
Job Search Expenses: They are usually deductible, but just to change jobs inside your present field.
Notably, for workers in hazardous environments, safety gear is deductible regardless if it's required or not.
Warning: Deductions Raise Your Audit Possibility
Work-related deductions may summon an IRS audit, more in case if expenses are hefty against the income. Also, the major audit cause could be the difference among previous and this year’s returns.
The best thing to do is to maintain complete records, adhering to IRS rules. But claiming to what you are entitled to is important regardless of unusualness of expenses. They just need to be legitimate and documented.
