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6 Tips About Employee Business Expenses


[fname], did you know that taxpayers who pay work-related expenses out of their own pocket may be able to deduct them?


Generally, employee business expenses are deductible if they are more than two percent of adjusted gross income.

In most cases, they go on IRS Schedule A, Itemized Deductions.

Other key points about employee business expenses:

1. They must be Ordinary and Necessary. People can only deduct unreimbursed expenses that are ordinary and necessary to their work as an employee. An ordinary expense is one that is common and accepted in the industry. A necessary expense is appropriate and helpful to a business.

2. Expense Examples. Some potentially deductible costs include:

- Required work clothes or uniforms not appropriate for everyday use.
 

- Supplies and tools for use on the job.
 

- Business use of a car.
 

- Business meals and entertainment.
 

- Business travel away from home.
 

- Business use of a home.
 

- Work-related education.

This list is not all-inclusive. Special rules apply for reimbursed expenses by an employer. IRS Publication 529, Miscellaneous Deductions, and Publication 463, Travel, Entertainment, Gift and Car Expenses, provide more details.

3. Forms to Use. In most cases, expenses are reported using Form 2106 or Form 2106-EZ. IRS Schedule A may also be used.

4. Educator Expenses. K-12 teachers may be able to deduct up to $250 of certain expenses paid in 2016. These may include books, supplies, equipment and other materials used in the classroom. They are an adjustment to income rather than an itemized deduction. In other words, people do not need to itemize to claim them. IRS Publication 529 has more.

5. Keep Personal Records. The IRS urges people to keep good records for proof of income and expenses and also as a reminder not to overlook anything. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.

6. Keep Business Records. Typically, the IRS can come after your business for failing to report income for up to 6 years after your filing if the amount is greater than 25% of your business's gross income. If you filed for a deduction for a bad debt or worthless security, the IRS suggests you keep your supporting tax records for 7 years.

 

Don't hesitate to call us if you have a question on any of these Employee Business Expense issues or if you need help or want to get started on tax planning for 2017 already!  If you have comments or questions on the information in these articles, as usual feel free to call our offices.
 

Don't hesitate to call us if you need help or want to get started on tax planning for 2017 already!  If you have comments or questions on the information in these articles, as usual feel free to call our offices.  Thanks!  Charlie

 

     

     

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As always you can call our offices if you have any questions about these or any other accounting, tax, financial planning or Quickbooks related issues, at 281-993-4530. 

 

Regards, Charles S. Wilson, CPA/CFF, CGMA, CBEC

Certified Public Accountant

Certified Business Exit Consultant

 

 

       
   
       
 
       

       

Charles S. Wilson, CPA/CFF, CGMA | Charles Wilson, LLC | 307 S. Friendswood Dr, Ste B-2
Friendswood, TX 77546 | 281-993-4530 (O) | 866-567-3975 (F) | charlie@wilsonaccounting.net