Have you ever found yourself shelling out a bit of cash because of your job for things that your employer doesn’t reimburse? Perhaps you had to travel for work, or use your cell phone for work for the convenience of your employer. You may be pleasantly surprised to find out that you can deduct some of these expenses. Doing so just requires familiarity with form 2106-EZ, better known as the form for unreimbursed employee business expenses.
First, let’s take a look at what you can deduct. Per the IRS, you’re allowed to deduct expenses that are not reimbursed by your employer, provided they meet the following standard:
“You are an employee deducting ordinary and necessary expenses attributable to your job. An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary.”
In other words, you can only write off expenses common to your business. Let’s say you’re an attorney or sales representative who went to meet with a client and forgot to bring any pads to write on. You then stop at an office store and pick up a pack of pads. Office supplies are (generally) considered a regular expense of white-collar work, so if your office doesn’t reimburse for this sort of thing, you can deduct the cost. (This is an entirely hypothetical example. If you have any questions about whether or not something is deductible, err on the side of caution and consult a tax pro.)
Now, let’s take a look at the expenses people most commonly deduct using Form 2106-EZ. Typically, tax filers will deduct:
- Vehicle expenses
- Parking fees, tolls, and transportation including trains and buses but not related to commuting or overnight travel
- Travel expenses while away from home overnight
- 50% of the amount paid for meals and entertainment while you were away from home on business
- Many other business expenses.
If you use your car for business purposes, you’ll want to keep detailed records of mileage related to business, but not commuting. However, if you’re commuting to a temporary work location away from your typical location, you can include those miles as business related. If you’re assigned to the location for one year or less, or if it is outside the metropolitan area in which you typically work, then those miles qualify. Although Form 2106-EZ doesn’t ask for detailed records of your mileage and trips, it does ask if you have evidence to support your deduction, so it’s best to keep detailed mileage records.
For everything else, you’ll also want records and receipts. In order to deduct expenses, you’ll need to keep detailed records to prove the time, place, business purpose, business relationship (for entertainment expenses), and the amount of the expenses. According to the form’s instructions, you must have receipts of all lodging expenses regardless of amount and receipts for any expense at or over $75.