What are Deductible Employee Expenses

If you paid for work-related expenses out of your own pocket, and weren't reimbursed by your employer, you may be able to deduct those costs.

In most cases, you can claim allowable expenses if you itemize on IRS Schedule A, Itemized Deductions. You can deduct the amount that is more than two percent of your adjusted gross income. Or if you have a small business, you will itemize these expenses on an IRS Schedule C.

Here are some facts you should know:

1. Ordinary and Necessary- You can only deduct unreimbursed expenses that are ordinary and necessary to your work as an employee. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is appropriate and helpful to your business. *Do you have to have it, and your company doesn't supply it? You can deduct it!

2. Expense Examples- Some costs that you may be able to deduct include:

  • Required work clothes or uniforms not appropriate for everyday use.

  • Supplies and tools you use on the job.

  • Business use of your car.

  • Business meals and entertainment.

  • Business travel away from home.

  • Business use of your home.

  • Work-related education.

This list is not all-inclusive. Special rules apply if your employer reimbursed you for any of your expenses.

3. Forms to Use- In most cases, you report your expenses on Form 2106 or Form 2106-EZ. After you figure your allowable expenses, you then list the total on Schedule A as a miscellaneous deduction.

4. Educator Expenses- If you are a K-12 teacher, you may be able to deduct up to $250 of certain expenses you paid in 2015. These may include books, supplies, equipment and other materials used in the classroom. You claim this deduction as an adjustment on your return, rather than an itemized deduction. For more on this topic see Publication 529.

5. Keep Records- You must keep records to prove the expenses you deduct. For what records to keep, see Publication 17, Your Federal Income Tax.

If you have questions about an expense being deductible, give us a call... The sooner the better, so your records can be the most accurate! Our tax professionals have worksheets and helpful hints to lessen your tax burden, the right way ;-)

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