When the topic of business and job-related tax deductions come up, most people simply assume that you need to have your own business or be self-employed to be entitled to any deductions. While it’s true that business owners do receive a number of nice tax breaks, there is still the possibility that you may be entitled to some job-related tax deductions even if you work the 9 to 5 for an employer.
While not as generous as tax deductions available to business owners, the ability to deduct some job-related expenses can certainly add up. If you’re required to travel or conduct a lot of business outside of the office there’s a good chance your employer reimburses you for many of these expenses, but every company is different and you may be footing the bill for things that you could possibly claim as a deduction.
Before getting into the actual deductions we need to understand what the IRS considers unreimbursed employee expenses. Your expenses must have been required for you to carry out the job for which you were hired and must be what the IRS calls “ordinary and necessary.” This means the item or service is common and accepted in your line of work and is appropriate and helpful to your job. In addition, to be able to claim these deductions you must itemize on Schedule A, and your unreimbursed business expenses must total more than 2 percent of your adjusted gross income(AGI). To give you an idea, if you have an AGI of $40,000, your expenses need to be more than $800 before you could begin claiming any deductions.
Possible Deduction Categories
To give you a better idea of what types of expenses might qualify for unreimbursed job-related expenses, here is a brief overview. And again, these only qualify if your employer doesn’t already reimburse you.
- Legal fees related to doing or keeping your job.
- Licenses and regulatory fees as well as occupational taxes.
- Dues to professional groups, unions, or local trade groups.
- Education that is related to or required for employment.
- Work clothes and uniforms, and possibly upkeep costs.
- Subscriptions to professional journals and magazines related to your line of work.
- Medical examinations that are required by your employer.
- Depreciation on technology required to do your job.
- A home office or part of your home used regularly and exclusively for work.
Unfortunately, commuting expenses to get to and from your job are not a deductible expense, but if you do need to use your vehicle for work-related activities such as meetings, conferences, trade shows, or other travel, you may be able to deduct the actual expenses required for the trip or use the IRS standard mileage deduction.
Above all else, keep good records throughout the year. You may or may not reach the 2 percent threshold, but it’s worth keeping track just in case, and it’s a lot easier to tally up receipts at the end of the year rather than trying to come up with all of your expenses after the fact. If you’ve determined that you qualify for deducting some of these expenses you can look to Form 2106 or 2106-EZ. And of course, TurboTax will assist you with recording and claiming these unreimbursed job-related expenses.