If your employer doesn’t reimburse you for work-related expenses, you can sometimes deduct them from your taxes. You can claim allowable expenses on Schedule A, Itemized Deductions. The IRS recently sent out a reminder about what you need to know in order to claim your expenses.
- Expenses must be “ordinary and necessary” — This means that any expense you claim has to be both helpful to your work and commonly accepted in your industry. For example, required uniforms, supplies or tools you use while working, business use of your car, business meals while you are entertaining a client, business travel to attend an industry conference, work-related education, etc. More information is available on Publication 529 and Publication 463.
- In most cases, you’ll report your expenses on Form 2106 or Form 2106-EZ — You’ll list the total of your allowable expenses on Schedule A as a miscellaneous deduction. Note that you have to have enough deductions overall to itemize. And then you only get to deduct unreimbursed business expenses in excess of 2% of your adjusted gross income, which can be a pretty significant number.
- You can deduct $250 of teacher expenses, if you’re a K-12 educator — Allowable expenses include books, supplies, equipment, and other materials used in the classroom. You claim this deduction as an adjustment on your tax return, rather than as an itemized deduction.
- Be sure to keep records. You have to be able to prove the expenses you deduct, so keep records. For more information on what records to keep, see Publication 17, Your Federal Income Tax.
If you have questions about deducting your expenses as an employee, feel free to give us a call at (864) 836-3136 and we’ll schedule a time to talk.