Previously we discussed deductions for job seekers. What if you’re content to stay with your current job and have no desire to pound the virtual payment in search of a new gig? You’re in luck too because you may be able to deduct some of your work-related expenses for your present job.
Unreimbursed Employee Expenses
If you pay job-related expenses that are not reimbursed by your employer during the year, you’re in luck. Here are the guidelines for such expenses:
- Paid or incurred during the tax year
- Ordinary expenses: These are expenses that are common within your industry. If you’re a contractor, you could write off a portion of those new power tools you purchased, but you may not get away with the same if you write code for a living.
- If the expenses are necessary, e.g. helpful to your business or trade.
Common Deductible Expenses
Some of the more common employment-related expenses include:
- Dues for professional, business or civic organizations within your industry
- License renewal fees
- Passport required for business travel
- Subscriptions to professional or trade publications related to your occupation
- Travel, transportation, lodging, meals and entertainment as they relate to your line of work
- Uniform expenses if required for your job and if your uniform isn’t suitable for off-hours use.
- Union initiation fees and dues
You can see a more comprehensive list of deductible expenses in IRS Publication 529.
Educator and Home Office Deductions
If you are an educator, you will also be able to deduct certain expenses.
K-12 teachers, principals, aides, counselors who work at least 900 hours during the school year may be eligible to deduct the cost of books, supplies, equipment (including computer expenses) and other classroom materials. College professors may be able to deduct research-related expenses.
The home office deduction is available under certain circumstances; if you use part of your home exclusively for business purposes and it is your principal place of business where you meet with clients or customers.
Your home office arrangement must also be for the convenience of your employer; many employers are trying to reduce their own overhead by having some of their staff work from home, so this trend could be in your favor when tax season rolls around.
As with anything IRS or tax-related, you’ll only be able to deduct a percentage of your overall expenses, provided those expenses meet the guidelines for unreimbursed expenses.
How Much is Deductible?
The formula is roughly the same as for job search-related expenses: any amount in excess of 2 percent of your AGI. For example, if your AGI is $20,000, you can only deduct anything in excess of $400.00. This is taken after you apply the 50-80 percent limit on meal, travel, and entertainment expenses (if they apply).
If you’ll be preparing your own tax return, you’ll need to attach Schedule A (Itemized Deductions) to your 1040 form and state these expenses under “miscellaneous expenses.”
Be sure to keep accurate records and hold on to any receipts or bills that are associated with the expenses you’re deducting. You’ll want to have them handy if the IRS should come calling.
IRS Publication 587 has more detailed information on calculating and reporting your work-related deductions; all information is based on the 2014 tax year. 2015 tax year information is not yet available.
If you’re not a tax code whiz, don’t worry. We have qualified tax advisers on hand that will answer your questions and even prepare your return for you when the time comes. Just click the white “Start Chat” button in the upper right-hand corner of our page, or give us a call. We’ll be glad to help.