Tax Deductible Items
Tax Deductible Items for your Job – Keep Accurate Records
Most individuals who are employed, and earn W-2 wages, usually don’t have on the job expenses. However, many others do have various tax deductible items that can be used on their tax return to reduce their taxable income.
Various professions, such as law enforcement, outside sales, and construction workers, to name a few, incur expenses in the performance of their job that are not reimbursed by their employer.
These could include tools, uniforms, use of personal auto, uniform cleaning, and many others. The important thing to remember is that these employee business expenses can be deductible if you personally paid for them and you were not reimbursed by your employer.
Where do you claim and deduct these tax deductible items?
As an individual employee, you can deduct these items if you use the itemized deduction method on Schedule A, and are not using the standard deduction.
On the Schedule A, the employee business expenses are reported under the miscellaneous deduction category at the bottom of the form. The grand total of these deductions must exceed 2% of your adjusted gross income to be of any benefit.
If you are preparing your taxes at our online tax filing site, 1040.com, you can go to the screen, Job, Tax Preparation, & Other Expenses. If you only have a few expenses, such as union dues and/or uniforms, they can be entered here.
If you have other detailed job expenses or use of your auto, you need to use the Employee Business Expense, Form 2106.
What type of expenses are deductible?
The listing can be quite extensive, and we caution you to keep accurate records for these expenses. If you are audited by the IRS, and this section of your tax return is included, they will look at auto mileage records and cell phone and/or computer logs closely. Following are types of tax deductible items:
• Work clothing and uniforms. (Not street clothes)
• Tools and other equipment used for the job
• Computers, tablets, and cell phones used for work.
• Union dues and other trade association dues
• Cost of your subscriptions to professional and trade publications that are work related
• You can deduct expenses looking for a job as long as it is within your current profession.
• You can deduct the cost of education as long as it improves or maintains your current skills
This list is not all inclusive.
Types of Reimbursement
If your employer has an “Accountable Plan”, whereby you’re required to submit to them all of your receipts to get reimbursed, then you can’t deduct any of your expenses. Your reimbursement also isn’t taxable income.
If your employer’s plan doesn’t meet IRS criteria and isn’t considered “accountable”, the reimbursement is taxable income. You can then list and deduct all of these expenses, which offsets the reimbursed income essentially. IRS Publication 463 will explain this procedure in detail.
Which business expense schedule is used?
The IRS has two Employee Business Expense schedules, the Form 2106 and Form 2106-EZ. You don’t have to be a tax accountant when you use our online tax filing site, 1040.com, to do your taxes. You simply enter your various business expenses where it’s called for, and employer reimbursement, if any, and our program will know what form you need. It will then prepare the correct Form 2106 for you. There’s no need for you to be concerned if you’re using the correct form.
We encourage you to give our online tax filing site, 1040.com a try, with no obligation whatsoever.