Your ungrateful boss makes you get your own passport for your next overseas trip, pay for your own liability insurance and subscribe to three trade journals just to keep up with the industry. Of course, you’ve got to foot the bill for all this. Uncle Sam feels your pain, and might allow you to claim some of the costs on your taxes. Unfortunately, the deduction might not do you any good because it is an itemized, miscellaneous deduction, which means you can only claim the expenses if you forgo the standard deduction and only to the extent that the deductions exceed 2 percent of your adjusted gross income.
Keep receipts of all your unreimbursed work expenses during the year. If you’re claiming mileage, you need to keep a record as you drive that shows how many miles you drove, where you drive, when you drove and why you made the trip. If you get audited and don’t have the records to show your expenses, your deduction will be disallowed.
File your income taxes with Form 1040 and itemize your deductions on Schedule A.
Report your total unreimbursed work expenses on line 21. For example, if you spent a total of $3,000, enter $3,000.
Add your unreimbursed work expenses to any other miscellaneous deductions you claim, such as tax prep fees or safe deposit boxes, and report the total on line 24. If you don’t have any other miscellaneous deductions, just enter your unreimbursed work expenses.
Multiply your adjusted gross income from line 38 by 0.02 to figure the 2 percent floor. Report the result on line 26. For example, if your adjusted gross is $65,000, 2 percent is $1,300.
Subtract 2 percent of your adjusted from your total miscellaneous deductions affected by the 2 percent floor, including your unreimbursed work expenses, and report the total on line 27. In this example, subtract $1,300 from $3,000 to find you can claim a $1,700 deduction.
Add the deduction to your other itemized deductions and report the total on line 29 of Schedule A and line 40 of Form 1040. This amount lowers your taxable income for the year.
- Make sure your expenses are actually a deductible expense and not an inherently personal expense. For example, deducting haircuts for military members who are required to get them regularly have been denied, as have gym memberships for firefighters who have to remain in good physical condition. Uniforms are only deductible when they are required for your job and are not suitable for wearing outside your job. For example, a Civil War re-enactment uniform would be deductible, but your fancy business suit isn’t, even if you never wear it outside of work. A list of deductible expenses can be found in IRS Publication 529.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."