Tax Tips

You may be able to deduct your unreimbursed business expenses as miscellaneous itemized deductions subject to the 2% adjusted gross income floor. You can't deduct the cost of any item for which you would have been reimbursed if you'd asked for the reimbursement. Your employer will not include in your wages reimbursement for your expenses paid under an accountable plan. You cannot deduct these expenses. But if the reimbursement is paid under a nonaccountable plan, the reimbursement will be included in your wages and you deduct the expenses as miscellaneous itemized deductions subject to the 2% adjusted gross income floor.

Which deductions qualify and why?

If you pay out of pocket for job-related expenses, you may be able to deduct them on your return. In general, tax-deductible job expenses must be ordinary and necessary. A job expense is ordinary if it is common and accepted in your trade, business or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary.

Tax-deductible expenses include the following:

• bonding
• physical examinations
• office supplies not provided by your employer
• professional or trade association dues
• research, lecture and writing expenses
• safety clothes and equipment
• union dues
• personal tools and equipment
• travel, meal and entertainment expenses (see Publication 463)
• computers and mobile phones (see Publication 946)

You must report these and other unreimbursed business expenses on line 21, Schedule A or on Form 2106.

Business Travel

The expense of your daily commute to work isn't tax deductible. However, if you find that you must travel to secondary or temporary locations — even within your metropolitan area — as part of your job and your employer does not reimburse you for that travel, those expenses may be tax deductible. Also, travel to and from a second job may be tax deductible.

Unreimbursed expenses for business travel outside of your metropolitan area may also be tax deductible. And you generally can deduct 50% of the cost of qualifying meals and entertainment expenses. You must complete Form 2106 to claim these tax deductions.

Home Office Tax Deduction

If you use a portion of your home regularly and exclusively for business, you may be able to deduct expenses for that portion of the home, including interest, taxes, rent, insurance and utilities. You can deduct business expenses for the use of your home only if the use is for your employer's convenience. Special rules apply if your employer pays you rent for the portion of the home you use for business.

To learn more about employment tax deductions, contact your H&R Block tax professional.