is used to calculate whether or not your employee business expenses such as travel expense, vehicle expense, and meals can be deducted on Schedule A
as a miscellaneous itemized deduction. If your employer fully reimburses your employee business expenses under an "accountable" plan, you do not need to fill out Form 2106
. An accountable plan is basically a plan that requires the employee to substantiate the employee business expenses by turning in receipts and other documentation to the employer. If your employer has an accountable plan, then your employee business expense reimbursements will not be included in your W-2
, so you would not deduct those expenses on Form 2106
or Schedule A
. If you aren't reimbursed, partially reimbursed, or if the reimbursement is added to your W-2
wages, then use Form 2106
to calculate your expenses.
Form 2106 Tax Tips
Unreimbursed job expenses can be deducted on Schedule A
as miscellaneous itemized deductions if the expenses exceed 2% of your adjusted gross income (AGI). The best deal is to have your employer reimburse the expenses so that the expenses aren't reduced by the 2% of AGI rule. You could work a deal with your employer to reduce your salary by the same amount of previously unreimbursed job expenses that your employer agrees to begin reimbursing.
The following are some of the most common unreimbursed job expenses:
- Automobile Expense - You can't deduct commuting expenses (other than commuting to a temporary job location), but any other job-related automobile expenses are deductible. There are two ways you can deduct automobile expenses. The easiest way is to keep track of mileage and multiply your total job-related miles by the standard mileage rate. In 2015, the standard mileage rate is 57.5 cents per mile. If you own an expensive car, the actual automobile expense method is probably better for you. This method is more complicated since you have to keep track of all your automobile related costs. You also get to take depreciation on your vehicle. One item to note is that if you own a good-sized truck or sports-utility vehicle, you may not be subject to the annual limits on automobile depreciation. Your vehicle needs to have a gross weight of 6,000 pounds or more when fully loaded in order to qualify for the exemption to the automobile depreciation limits.
- Overnight Travel Expense - All of your unreimbursed travel expenses are deductible if the travel relates to your job. However, only 50% of your meals and entertainment will be deductible on your tax return. Many people use the per diem rates published by the government to establish their meals and incidentals (tips, laundry, dry cleaning etc.) expenses. You can obtain per diem information from government websites, your employer, or from your accountant. Other travel expenses such as airfare, phone calls, taxi-cab fares, entertainment or lodging need to be documented with actual receipts.
- Meals and Entertainment - You can deduct 50% of unreimbursed business related meals and entertainment. An easy way to document your expenses is to write on the back of your receipt who was with you, your business relationship, and the business purpose and discussion.
- Other Expenses - Other examples of employee expenses are union dues, professional dues, tools and computer related equipment (depreciation may apply), safety shoes, safety glasses and other protective clothing, uniforms, business cards, licenses, trade magazines and subscriptions, briefcase, office decorations, office supplies, out-of-town job assignments, certain education expenses, certain job search expenses, and malpractice insurance.