Job-Related Deductions

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.

So this year, as you’re enjoying a burger and a beer (or a raspberry lemonade), mull over these ideas a way to work smarter, rather than just harder.

Research Salaries

Using tools like Salary.com, try to find out if you’re being paid the market rate for your position. It’s a tough economic environment and you may not have much negotiating room but it still pays to understand if you’re being compensated fairly for your work. If you are in a high demand field, you may discover it’s worth it to explore other options. You may also learn that you are already well compensated, in which case you can stop complaining about being underpaid!

Use Education Reimbursement

Many employers offer education reimbursement programs that will pay for some, if not all, secondary schooling. I used education reimbursement at my former employers to help pay for a Masters in Business Administration. You should take advantage of these offers because they represent a way for you to boost your overall “compensation” without an uncomfortable raise discussion! Not only do you reap the rewards today of additional skills, by not having to pay for them, but you may find that your future earning potential will have improved with those additional skills.

Use Medical Benefits

Take a few minutes to review the medical benefits you may have with your employer’s health insurance plan, you may discover that you’re leaving a lot of money on the table by not taking advantage of services you are entitled to. Many insurance plans offer annual checkups, smoking cessation programs, and other services that you could use, if you knew they were available. Preventative care doesn’t get as much attention as prescriptive care because it’s less profitable for drug companies, so keep a little more cash in your pocket by getting annual checkups and dental cleanings.

Participate in Retirement Plans

If your employer offers a retirement plan, especially one with a contribution match, you should take advantage of it. When it comes to free money from your employer, a contribution match is about as free as you can get. When you contribute to a retirement plan like a 401(k), you can deduct the contributions from your income. Oftentimes, employers try to entice employees by offering a match on that contribution up to a certain dollar amount. If your employer offers something like this, it behooves you to take advantage of it if you can.

Use Your Vacation

You might be surprised to see this bit of advice but every year there are employees who lose vacation days because they didn’t use them in time. Most companies let you carry over vacation days from year to year, up to a limit, but people still let the expire sometimes. The economic recession has exacerbated the problem of workers overworking because people are afraid of losing their jobs and being seen as less than industrious. According to Right Management, 66% of employees don’t use all their vacation time. It’s a paid benefit and you should use it to refresh and recharge. If you are concerned, take a long weekend or two rather than a week off at a time.

In the end, it often pays to take a few moments to think about what you get out of work, in addition to what you put in, and how you can make your labor go a little farther this year.