Employee Business Expenses
If you itemize deductions and are an employee, you may be able to deduct certain work-related expenses.
Only employee business expenses that are in excess of 2% of your adjusted gross income (AGI) can be deducted.
Qualifying Business Expenses
Expenses that qualify for an itemized deduction include:
- Business travel expenses
- Business use of car
- Business entertainment expenses
- Business use of your home
- Work-related educational expenses
- Miscellaneous employee expenses
You must keep records to prove the business expenses you deduct.
If the plan under which you are reimbursed by your employer is non-accountable, you must include the expenses, but you can take a deduction for them.
If your employer gave you reimbursements under an accountable plan, you need not include the payments in your gross income, but you cannot take a deduction for the payments you received in relation to the expenses.
An accountable plan must meet three requirements:
- You must have incurred the expenses while performing services as an employee.
- You must adequately account to your employer for these expenses in a reasonable period of time.
- You must return any excess reimbursements or allowances within a reasonable period of time.
Report employee business expenses on Form 2106 - Employee Business Expenses. This form flows to Schedule A - Itemized Deductions.
For more information see IRS Tax Topic 514 - Employee Business Expenses.