If you are an employee, you may be able to deduct all or part of
your employee business expenses as an itemized deduction (subject to limitations)
on Schedule A of your Form 1040.
Employee business expenses include the cost of business travel away from
home, local transportation, entertainment, gifts, and other ordinary and
necessary expenses related to your job.
Deductible travel expenses are the ordinary and necessary expenses
of traveling away from your tax home on business. They include the cost
of transportation, meals (subject to certain limitations), and lodging.
For travel expense purposes, generally, your tax home is the entire city
or general area where your main place of business is located, regardless
of where you maintain your family residence. Select Topic
511 for additional information on business travel expenses.
Deductible local transportation expenses are the ordinary and necessary
expenses of going from one work place to another when you are in the area
of your tax home. If you have a regular place of business outside your
home, they also include the cost of getting from your home to a temporary
workplace either within or outside the area of your tax home. If you have
no regular place of business outside your home, then include only the cost
of getting from your home to a temporary work place outside the area of
your tax home. The cost of commuting between your home and your regular
work place each day is never deductible. Transportation expenses include
the cost of transportation by car, air, rail, bus, taxi, etc. For information
on transportation expenses related to your car, select Topic
510.
Business entertainment expenses and business gift expenses may be
partly deductible. For information on business entertainment expenses,
select Topic 512. You can order Publication
463, Travel, Entertainment, Gift, and Car Expenses, for additional
information on business expenses.
You must keep records to prove the expenses you deduct. For general
information on record keeping, select Topic 305.
If your employer reimbursed you or gave you an allowance for your
travel, transportation, entertainment, gift, and other work-related business
expenses under an accountable plan, these payments are not shown on your
Form W-2. You do not include the payments in your income, and you can deduct
only the amount of your expenses that exceeds the reimbursement.
To be an accountable plan, your employer's reimbursement or allowance
arrangement must meet three requirements:
- It covers only expenses that are deductible as employee business
expenses.
- It requires you to adequately account to your employer the expenses
within a reasonable time period.
- It requires you to return any excess reimbursement or allowance
within a reasonable time period.
If your employer's reimbursement arrangement does not meet all three
requirements, the payments you received should be included in the wages
shown on your Form W-2. You must report the payments as income, and you
can deduct your expenses as though you were not reimbursed.
If you were reimbursed for travel or transportation under an accountable
plan, but at a per diem or mileage rate that exceeds the IRS approved rate,
the excess should be included in the wages on your Form W-2. If your actual
expenses exceed the approved rate, you can deduct the excess. For information
about the approved per diem and mileage rates, see Publication
463.
Generally, you must use Form
2106 or 2106-EZ to figure
your deduction for employee business expenses and attach it to your Form
1040. Your deductible expense is then taken on Schedule A of Form 1040,
as a miscellaneous itemized deduction subject to the 2% of adjusted gross
income limit. The 2% limit is discussed in Topic 508.
Publication 529, Miscellaneous
Deductions, also discusses the 2% limit and explains some of the other
expenses that are deductible as employee business expenses.
Publications can be downloaded
from this site, or ordered by calling 1-800-829-3676.
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