Tax Credit for Unreimbursed Job Expenses
You can take a tax deduction for expenses related to your job for which you are not reimbursed by your employer. Not all job-related expenses are covered. You can take a deduction for required training, for example, but not for commuting to and from work. There's a catch to taking deductions, though, as your total spending on unreimbursed job expenses has to exceed the limits set by the IRS.
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Deductions
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You can use a tax deduction to reduce the overall amount of your taxable income. For example. your gifts to charity are deductible and can be subtracted from your gross income to lower the amount of taxes you pay. Deductions are distinct from tax credits, which are subtracted directly from taxes, rather than from your income.
2 Percent Limit
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The IRS imposes a 2 percent income test on certain types of deductions. That is, you can only take a deduction on amounts that exceed 2 percent of your adjusted gross income. Unreimbursed employee expenses are subject to the 2 percent limit. If your AGI is $50,000 then you can take a deduction on unreimbursed employee expenses in excess of $1,000, which is 2 percent of your AGI.
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Allowable Expenses
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The IRS provides a detailed list of expenses for which you can generally claim a deduction. These include liability or malpractice insurance, tools and equipment needed for your job, professional dues and memberships and non-commuting travel costs. Some educational expenses are also allowable deductions.
Nondeductible Expenses
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Not all job-related expenses are deductible even if they are not reimbursed. Among the expenses listed by the IRS as nondeductible are commuting costs, fines and penalties, investment seminars, political contributions and lobbying expenses. The IRS specifically lists illegal activities such as bribes and kickbacks as nondeductible expenses.
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References
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