From Carol McAtee’s CPA firm in St. Petersburg, FL– If you are a taxpayer that works for someone else (other than yourself), you may be able to deduct certain work related expenses you have paid out-of-pocket. However, the rules for deducting these business expenses can be complicated. One main problem for taxpayers is that, unlike the business expenses of self-employed individuals, unreimbursed expenses of W-2 employees are treated less favorably. Regular employees must itemize to take business expense deductions and the deduction is limited, whereas self-employed taxpayers may take “above-the-line” deductions for business expenses.
Expenses that qualify as itemized deductions include:
- Business travel away from home
- Business use of car
- Business meals and entertainment
- Travel
- Business use of home
- Supplies
- Tools
- Continuing education
- Miscellaneous expenses
Only unreimbursed expenses qualify for the deduction. If a taxpayer is reimbursed by their employer for the expenses, the reimbursements are not included in income and no deduction is allowed for the expense. Additionally, only employee business that are in excess of two percent of your adjusted gross income can be deducted. For example, if a taxpayer has $50,000 in adjusted gross income, then only expenses that exceed $1,000 can be deducted on the tax return.
Finally, it is important for taxpayers to keep good records (receipts) to prove the amounts of any unreimbursed business expenses received during the tax year.
For assistance in determining what business expenses are deductable, please contact our office. As tax professionals, McAtee & Associates can help both individual and business taxpayers with all their tax matters.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
