How Much of My Unreimbursed Employee Expenses Can I Deduct?

by Herb Kirchhoff

If you incur employee expenses that your employer doesn't reimburse to you, they may be deductible from your income. But you must itemize deductions to deduct those expenses. You claim unreimbursed employee expenses as a miscellaneous deduction, subject to a 2 percent income exclusion. That means you can deduct unreimbursed employee expenses that exceed 2 percent of your adjusted gross income. There is no specific dollar limit on the unreimbursed employee expenses you can deduct.

Expense Qualifications

To get a deduction, you must have paid or incurred the business expense during the tax year, the expense must be appropriate and helpful to carry on your trade or business for your employer, and it must be common and accepted in your occupation. Expenses your employer pays back to you in the same year you incurred them cannot be deducted. If your employer reimburses your expenses in a later year, you must include the reimbursement in that year's income, up to the amount of your employee expense deduction in the earlier year.

Deductible Expenses

Things you can deduct as unreimbursed business expenses include subscriptions to professional or trade publications related to your occupation, licenses and regulatory fees required by state and local governments for your trade or profession, occupation taxes levied by a local government for the privilege of doing business in the locality, job-related legal fees, costs of work-related education, medical exams required by an employer and business liability insurance premiums. If you are disabled, you can deduct the unreimbursed costs of attendant care and adaptive equipment at your workplace that enable you to hold down a job.

More Deductions

You also can deduct unreimbursed union dues and dues to professional, trade and business associations if membership helps you in your job. A college professor can deduct the costs of research required by the college or university to maintain his academic status. If your job requires you to wear a distinctive company uniform or protective clothing such as a hard hat or safety shoes, you can deduct the unreimbursed costs of buying and maintaining these items. Deductible work clothing must be required by your employer and must not be suitable for off-the-job street wear.

Home Office

Another unreimbursed business expense you can deduct is the cost of maintaining a home office. To be deductible, the home office must be your principal place of business, be used regularly and exclusively for business purposes and be maintained for the convenience of your employer. This last requirement means you are maintaining a home office so your employer doesn't have to provide you with a workplace. If your home office is located in your house, you can deduct expenses according to the proportion of your house used for the office. For example, if your home office occupies 10 percent of the house square footage, you can deduct 10 percent of the home's operating expenses. You also can deduct a depreciation allowance on the home office space, computers and office equipment if used exclusively for business purposes.

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