Tax Tips

Tax Tip

Overview

Common employment deductions include your computer, mobile phone, work uniforms, union dues and professional or trade association dues.
Although the cost of driving to and from work isn't deductible, travel to secondary or temporary job locations could be.
The expenses of using an area of your home for business may be deductible if the area is used exclusively and regularly for work and the use is for your employer's convenience.

If your employer doesn't reimburse you for ordinary and necessary expenses you pay, you may be able to deduct the cost as a miscellaneous itemized deduction 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.

Which deductions qualify and why?

If you do end up paying out-of-pocket for job-related expenses, you may be able to deduct them on your return. In general, deductible expenses must be ordinary and necessary. An 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.

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 20, Schedule A or on Form 2106.

Business Travel

The expense of your daily commute to work isn't 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 deductible. Also, travel to and from a second job may be deductible.

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

Home Office

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 deductions, contact your H&R Block tax professional.

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Frequently Asked Questions

Question: Are health insurance premiums that are taken out of my paycheck as pre-tax dollars deductible?
Answer: No, they aren't deductible, because you already received the tax benefit. In fact, having it taken out pre-tax may well be a greater benefit because of the AGI limitation on medical expenses on the return.

Question: My husband has a company car to use while he's working, but the company doesn't pay for gas. Can we deduct the cost we pay for gas?
Answer: His employer will include either the value of personal use or 100% of the lease value of the car in wages on Form W-2. How the employer reports the use of the car determines how you will deduct your expenses. If the employer includes 100% of the lease value in W-2 wages, you can deduct all of your expenses for the business use of the company car. Otherwise you can deduct only the business portion of expenses. You can't use the standard mileage rate to figure your expenses. Contact an H&R Block office for more information.

Question: How much can I deduct per day for business expenses?
Answer: In general, there is no per-day business expense allowance. You can deduct any allowable business expenses that aren't reimbursed by your employer. If you're traveling, there's a standard allowance for meals and incidental expenses. The amount varies according to where you travel. There is no standard allowance for lodging expenses; you can deduct only your actual cost. See IRS Publications 463 and 1542.

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