Can I deduct unreimbursed employee expenses?
Editor’s Note: This article was revised 02/14/2018. Many who work from home, are self-employed, or are involved in a profession where workplace essentials are typically paid for out-of-pocket will find this article of use.
Starting in 2018, the Tax Cuts and Jobs Act has eliminated most miscellaneous itemized deductions, including unreimbursed employee business expenses. Employees must be reimbursed directly by their employer plan in order to receive compensation for expenses relating to their job. Under what is called an “accountable plan,” an employer may reimburse employees’ business expenses without including the amount in the employee’s wages.
You can deduct unreimbursed employee business expenses if both of these are true:
- You’re an employee.
- You itemize your tax deductions.
If you’re eligible to be reimbursed for any business expenses, you should request to be reimbursed by your employer. If you don’t request reimbursement when your employer offers it, you can’t deduct the costs.
The total of your employee business expenses must be more than 2% of your adjusted gross income (AGI) for you to deduct them. Some common business expenses eligible for deduction are:
- Business liability or malpractice insurance premiums — You can deduct insurance premiums you pay for:
- Protection against personal liability for wrongful acts on the job
- Professional negligence resulting in injury or damage to patients or clients
- Business use of home expenses — You can deduct part of the operating expenses and depreciation of your home if both of these apply:
- You use a part of your home regularly and exclusively for business purposes.
- You’re required to work at home for the convenience of your employer.
To learn more, see the Home Office Deduction tax tip.
- Rent paid for business space or equipment you use in your job
- Dues to professional societies or a chamber of commerce — If membership in an organization benefits your job, you can deduct the dues you pay. This includes organizations like:
- Bar or medical associations
- Boards of trade
- Business leagues
- Civic or public service organizations like Kiwanis, Lions, or Rotary clubs
- Real-estate boards
- Trade associations
- Subscriptions to professional journals and trade magazines related to work
- Work-related education — You can deduct the cost of education that either:
- Maintains or improves the skills required by your current job
- Is required by your employer
Deductible employee business expenses include amounts you pay for:
You can’t deduct these expenses if:
- The course isn’t related to your job or qualifies you for a new trade or profession.
- You’re required to take classes to meet the minimum educational requirements in effect when you first got the job.
- Job-search expenses — You can deduct unreimbursed employee expenses for searching for a new job in your current occupation. This applies even if you don’t find one. Expenses you can deduct include:
- Employment-agency fees
- Costs of preparing or having a resume prepared
- Postage for mailing resumes or other job-search correspondence
- Mileage and parking fees
- Travel expenses if the trip’s primary purpose is to look for a new job
- Licenses, regulatory fees, and occupational taxes — You can deduct the amount you pay each year to your state or local government for licenses and regulatory fees for your:
You can also deduct an occupational tax if it’s both:
- Charged at a flat rate by a locality
- For the privilege of working or conducting a business in the locality
- Medical and eye exams required by your employer
- Supplies and general office or operating expenses — You can deduct the cost of tools that wear out and you throw away within one year from the date you bought them. However, you generally must depreciate the cost of tools that both have a useful life beyond one year.
- Phone expenses — You can deduct the cost of:
- Long-distance calls made for business
- Phone features you use strictly for business
You can’t deduct the base rate of the first phone line into your home. You can deduct the cost of a second business line. If you purchase a cell phone exclusively for work, the cost of the phone is depreciable and the cost of the monthly plan is deductible.
- Travel expenses — You might travel away from your home overnight and incur employee business expenses. Travel expenses include:
- Cost of getting to and from your business destination
- Meals and lodging while away from home (but you can only claim 50% of the cost of your meals)
- Baggage charges
- Cleaning and laundry expenses while away from home
To learn more, see the Business Travel Expenses tax tip.
- Transportation expenses — You can deduct the cost of getting from one workplace to another when you’re not traveling away from home. Figure your car expenses by either:
- Deducting actual expenses
- Using the standard mileage rate
To learn more, see the Car and Truck Expenses tax tip.
- Entertainment and meals — You can deduct 50% of unreimbursed entertainment business expenses. However, it must be directly before or after a substantial and bona fide business-related discussion. This includes entertainment-related meals. To learn more, see the Meals and Entertainment tax tip.
- Gifts — You can deduct the cost of gifts up to $25 per year per current or prospective customer. However, items costing $4 or less that have your name permanently imprinted on them don’t count towards the $25 gift limit. This includes things like pens, desk sets, and plastic bags.
- Union dues and expenses, including initiation fees
- Work clothes, uniforms, and protective clothing — You can deduct the cost of protective clothing required in your work, like:
- Safety shoes or boots
- Safety glasses
- Hard hats
- Work gloves
If you’re required to wear a uniform for your job, you can deduct the costs of the uniform and its care, like:
The uniform must not be suitable for wearing every day. Ex: If you’re a postal carrier or police officer, you can deduct the cost of your uniform. However, you can’t deduct the cost of business suits or dresses that a job or professional organization requires you to wear. That attire is suitable for everyday wear not associated with work.
To learn more, see Publication 529: Miscellaneous Deductions at www.irs.gov.
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