The Internal Revenue Service has one general rule about deductions: if you spend money to make taxable income, you can take a deduction for it. However, in the case of work expenses that your employer doesn't reimburse, that rule has plenty of limitations. Like most tax questions, the answer to this one is: "It depends." If you're self-employed, you can deduct all work-related expenses on a Schedule C, but if you work for someone else, you have very few potential deductions without itemizing.
Teachers of kindergarten through twelfth grade have a distinct advantage. The IRS has a special deduction on tax Form 1040 and 1040A allowing a maximum annual deduction of $250 for classroom expenses for teachers, counselors, principals or classroom aides, as long as you teach or work with students for 900 hours per year. If both spouses are eligible educators, couples filing jointly may deduct up to $500 per year. The deduction is on line 23 of Form 1040 and line 16 of 1040A.
Armed Forces Reservists
Reservists of any branch of the service who travel more than 100 miles from home to perform their duties can report their travel expenses on Form 1040, rather than filing Schedule A. You must also file Form 2106, but your deduction won't be subject to the usual 2 percent of adjusted gross income limit required when itemizing work expenses.
If you performed for at least two employers during the year, earned at least $400 for your performances, and have an adjusted gross income of less than $16,000, you can deduct your business expenses on Form 2106 and 1040, without the need to itemize. However, your expenses must be at least 10 percent of your AGI, a far higher threshold than other professions.
If you took classes to maintain or improve your skills for your current job, you can take the Tuition and Fees deduction for up to $4,000 without itemizing. You must attend a school eligible for federal financial aid, even if you pay for it yourself. You cannot deduct any expenses reimbursed by your employer. You cannot include the cost of books unless you bought them directly from the school. File Form 8917 and report the amounts on Form 1040, line 34.
Other Work Expenses
All other unreimbursed work expenses must be reported on Schedule A, and only the amount over 2 percent of your AGI may be deducted. The exception is impairment-related work expenses for disabled employees; these are not subject to the 2-percent limit. This means most other expenses can't be deducted, even when itemizing. The bottom line here is to keep receipts, and get reimbursed by your employer if at all possible.
- Internal Revenue Service: Self-Employed Individuals Tax Center
- Internal Revenue Service: Education-Related Adjustments: Educator Expenses
- Internal Revenue Service: Car and Other Employee Business Expenses: Special Rules
- Internal Revenue Service: Tuition and Fees Deduction
- Internal Revenue Service: Schedule A Instructions: Job Expenses and Certain Miscellaneous Deductions
Naomi Smith has been writing full-time since 2009, following a career in finance. Her fiction has been published by Loose Id and Dreamspinner Press, among others. She holds a Master of Science in financial economics from the London School of Economics and a Bachelor of Arts in political economy from the University of California, Berkeley.