With Labor Day upon us, now is the time that workers should be thinking about the tax-deductible expenses they incur for their job. Retaining appropriate receipts and other records can support write-offs for these expenses at tax time. However, not all job-related expenses are deductible. Here is a roundup of some of the items you can and cannot deduct, and the gray areas in which deductions may or may not be appropriate.
Most unreimbursed employee business expenses are claimed as miscellaneous itemized deductions on Schedule A. Job-related personal moving expenses are deductible from gross income.
Examples of deductible employee business expenses include:
The biggest nondeductible expense is commuting costs. No matter how far or how long it takes you to get to and from work each day, your costs are not deductible. Exception: The added cost of bringing tools to work can be deductible (e.g., rental costs of a trailer to bring your own equipment to the job).
Other nondeductible expenses include:
If your employer reimburses you for out-of-pocket costs for job-related expenses under an “accountable plan” where you are required to substantiate your costs to your employer and meet certain other conditions, then you do not get to write off any of these expenses; the reimbursements are not taxable to you. But if the plan is a nonaccountable plan, the reimbursements are taxable to you, and you then deduct the expenses in the same way as if you hadn’t received reimbursement.