Employees May Be Able to Deduct Certain Costs

If you paid for work-related expenses out of your own pocket, you may be able to deduct those costs. In most cases, taxpayers claim allowable expenses on Schedule A (Form 1040), Itemized Deductions. Below are 4 tax tips about this deduction.

1. Ordinary and Necessary. You can only deduct unreimbursed expenses that are ordinary and necessary to your work as an employee. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is appropriate and helpful to your business.

2. Expense Examples. Some costs that you may be able to deduct include:    

3. Forms to Use. In most cases, you report your expenses on Form 2106 or Form 2106-EZ. After you figure your allowable expenses, you then list the total on Schedule A as a miscellaneous deduction. You can deduct the amount that is more than 2% of your adjusted gross income.

4. Keep Records. You must keep records to prove the expenses you deduct. For what records to keep, see the relevant section of Publication 17, Your Federal Income Tax.

For more information on other tax deductions, visit our section on Fringe Benefits.

Topics: Tips on Deducting Employee Business Expenses

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