Tax Tips for Unreimbursed Expenses
If you have to spend your own money to do your job, your employer may reimburse you for the costs. If not, you may be able to claim the unreimbursed expenses as a tax deduction. You can do this if you itemize deductions, and if the expenses, plus other miscellaneous deductions, add up to more than 2 percent of your adjusted gross income.
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Acceptable Expenses
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You can only write off unreimbursed expenses if you incurred them as part of your job during the tax year, and if the Internal Revenue Service considers the expenses "ordinary and necessary." Necessary expenses don't have to be mandatory, just "appropriate and helpful," according to the IRS. Expenses are ordinary if they're common and accepted in your line of work. Acceptable expenses could include legal fees, licensing, membership in professional groups, tools and work supplies, medical tests and a passport for a business trip, depending on your situation.
Travel
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If you travel away from home on business, you can claim the costs of meals, lodging, transportation and other business-related expenses as a deduction. At the local level, you can deduct the cost of using your car or other vehicle on business, or take a per-mile deduction. The miles you spend commuting to the office don't qualify, but if you go from the office to meet a client, or from a home office to a workplace, you can write off that mileage if it wasn't reimbursed.
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Restrictions
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If your employer is willing to cover your expenses, but you didn't ask for reimbursement, you can't claim what you spent as a deduction. Ask your employer for a written statement that whatever expenses you're claiming do not qualify for reimbursement. The IRS has a variety of other limitations on business expenses: You can't claim a deduction for work clothes, for instance, unless they're mandatory for your job and the outfits are not usable away from work.
Claiming the Deduction
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The 2 percent limit applies not only to unreimbursed expenses but tax-preparation fees and other miscellaneous expenses, including safe-deposit box fees, some legal fees and income from a hobby. Add all allowable 2 percent expenses together, then subtract 2 percent of your adjustable gross income. If your AGI -- calculated on the front of your 1040 -- is $30,000, for instance, 2 percent would be $600. Subtract this from the expense total and you can itemize whatever remains as a deduction.
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