4 Tax Deductible Work ExpensesNovember 27, 2017
You may qualify for a tax deduction if you use your personal vehicle for work or while looking for work. In addition, if you travel for work without being reimbursed, you might deduct those expenses too. Finally, if your employer requires you to take classes to maintain or update your professional skills, the cost of those courses may also be deductible.
Keep studious records as you go along so you don't have to deal with trying to recover every line item as you prep for taxes. We'll take a look at how to determine your overall reduction and which expenses might be exempt.
Qualified Tax Deductible Work Costs
1. Travel and Miles
You can deduct expenses related to travel if you use your car for work or by using standard deduction of the miles. Again, maintaining accurate documentation for any of the following is important:
• Oil or petrol
• Repair work
• Insurance and registration
You'll be able to deduct some of these expenses as they relate to employment. Multiply your annual expenses by a fraction, the numerator being work miles and the denominator representing total miles. Otherwise, check the standard rates for mileage in a given year. In 2016, that rate was $0.54 cents per mile, so simply multiply the miles you drove by that—or the current—number. There are restrictions to using this method though. You must use it in the first year but you can opt for actual expenses in subsequent years.
The IRS says that business miles are those you must drive for work purposes. That's because the miles you drive in this case will benefit your employer. If you need to go from your place of work to meet various clients throughout the day, those are business miles. Take note of the miles you drive from your business to various clients or professional places throughout the day.
Taking the Deduction
This deduction begins on Form 2106 and eventually ends up on Schedule A. You'll use 2106 to claim travel, mileage, and actual expenses. Even if you have your own business or work as a contractor, the same options are available with regard to standard miles or actual expenses. However, if you fall into either of these categories, you'll enter the data on Schedule C rather than Form 2106 and Schedule A.
2. Education For Work
If you need to take classes to improve your skills or remain current, you might be able to deduct these expenses. First, you can declare a miscellaneous deduction on Schedule A. This applies provided you didn't enroll in a tuition reimbursement program.
Secondly, you could take a fee and tuition deduction as an income change on Form 1040 should your expenses qualify. This deduction doesn't have an AGI floor, but it has an AGI limitation, so it's nice to have a back-up.
If you need a license for work, the costs of maintaining it are miscellaneous deductions on Schedule A. This also applies to member dues or professional subscriptions, and all are subject to the AGI floor cumulatively.
3. Deductions For Job-Seeking
Some expenses you get from looking for employment are deductible. Prepping, printing, and mailing documents you need, or traveling to look for work are all deductible as long as you aren't seeking your first job, one in a new field, and didn't have a long break between jobs.
Once again, these deductions are part of the miscellaneous section on Schedule A, with the same AGI floor, and you must lessen the deductible amount for reimbursements.
4. Various Job Costs
Union dues, the cost of buying and maintaining a work uniform or shoes, job tools, or special equipment, are all deductible expenses. As usual, these items are miscellaneous deductions for Schedule A and adhere to the AGI floor of two percent.
How to Deduct Expenses For Work
As you saw, these deductions are mostly miscellaneous in nature. If you get a W-2 tax form, any amount over two percent of your AGI is deductible. For business owners or 1099 workers, you may deduct these expenses entirely using Schedule C.
Paying taxes is always a hassle but keeping track of work deductions can make things easier. It can also help to reduce liability during tax season. You can check our tax filing guide for more info and share your experiences with us too.
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