If your employer doesn't reimburse your work-related travel and other necessary business expenses, you may qualify for a tax break. File Form 2106 for travel, meals, lodging and some vehicle expenses you spent for business purposes. You can only take the deduction if you itemize on Schedule A, and there are the typical IRS rules and restrictions on what's deductible. If you don't itemize, you won't be able to take advantage of this tax break.
Two Percent Threshold
The IRS limits the deduction for unreimbursed employee expenses to any amount over 2 percent of your adjusted gross income. That means taxpayers with eligible expenses below the threshold can't take the deduction. You'll be able to carry over the amounts from Form 2106 and add them to other work-related expenses on Schedule A, so you may find you can take the deduction when combined with union dues, tax prep fees and other allowable expenses.
If you used your own vehicle for work-related trips there are two options for claiming vehicle expenses: standard mileage, 55.5 cents per mile in 2012, or prorated actual expenses based on the percentage of time the car was used for business. It's easier to keep track of the miles you drove for work, but you may get a bigger deduction if you keep all receipts for gas, repairs, license plates and calculate depreciation. Prorate actual expenses by dividing the number of work miles driven by total miles driven in a year. Commuting mileage doesn't count as work when calculating the deduction. Use Form 2106-EZ if you take the standard mileage rather than actual expenses.
Other Eligible Expenses
Deduct any work-related airfare or train tickets and the cost of hotels at the full amount spent when the primary purpose of the travel was business. You can deduct only 50 percent of any food and entertainment expenses, such as taking a client to lunch. Unfortunately, you can't write off your mid-morning bagel snack. If you get a per diem for travel, only the amount over the per diem amount can be deducted. Report the per diem as a reimbursement when filing Form 2106.
The good news is that if you run your own company, you don't need form 2106. Even better, you're entitled to deduct all necessary expenses for your business, not subject to any threshold. Keep meticulous records of all expenditures and write them off on Schedule C, where you'll record both income and expenses, or Schedule E if you own rental property.
You won't need Form 2106 if you are a K-12 teacher, aide, principal or school counselor. You're entitled to deduct up to $250 of unreimbursed school-related expenses. Report the amount you spent on line 23 of Form 1040 or line 16 of 1040A. If you're disabled and require specialized equipment or assistance to perform your job and your company doesn't cover the cost, deduct impairment-related job expenses on Schedule A, even if it's not more than 2 percent of your AGI.
- Internal Revenue Service Publication 17: Your Federal Taxes--Completing Forms 2106 and 2106-EZ
- Internal Revenue Service: Form 2016 Instructions: Vehicle Expenses
- Internal Revenue Service: Topic 458 - Educator Expense Deduction
- Internal Revenue Service Publication 502 Medical Expenses: Impairment-Related Deduction
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.