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TAX TIP No. 43
Giving extra to your job? Get it back at tax time
Employees often give a little extra in their jobs.
If that giving is literal -- you paid some work-related
costs and weren't reimbursed -- you may be able to turn your professional dedication
into a tax break.
Itemization required
Many unreimbursed employee expenses can be
counted as miscellaneous deductions if you itemize on Schedule A.
The
only problem is that these deductions don't do you any good until they come to
more than 2 percent of your adjusted gross income. That means a worker with an
AGI of $30,000 must have expenses of more than $600 before the expenses are deductible.
And even then, only the amount over $600 counts.
Work-related expenses to consider
While the percentage
requirement may seem out of
reach, there are many costs
that workers overlook when
totaling their business expenditures.
Employee-paid expenses the
Internal Revenue Service allows
you to consider toward the
2 percent limit are below.
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| Potentially deductible employment costs: |
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Depreciation on a computer or cellular telephone required to do your job. |
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Dues to chambers of commerce, professional societies and unions. |
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Education that is employment-related. |
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Home office or part of your home used regularly and exclusively in your work. |
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Job-search expenses in your present occupation. |
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Legal fees related to doing or keeping your job. |
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Licenses and regulatory fees as well as occupational taxes. |
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Malpractice insurance premiums. |
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Medical examinations required by an employer. |
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Passport for a business trip. |
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Subscriptions to professional journals and trade magazines related to your work. |
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Tools and supplies used in your work. |
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Travel, transportation, entertainment and gift expenses related to your work. |
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Work clothes and uniforms, and their upkeep costs. |
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Meeting IRS work-related guidelines
Of
course, the IRS has some ground rules when it comes to determining precisely whether
these unreimbursed costs can be counted.
Your
expenses must have been required for you to carry out the job for which you were
hired and must be what the IRS calls "ordinary and necessary." This
means the item or service is common and accepted in your line of work and is appropriate
and helpful to your job.
And while
you'll get no argument that
making it to your office is
an ordinary and necessary
activity all employees face,
you can't write off the cost
of getting there. For most
of us working stiffs, unreimbursed
commuting expenses, either
by car or mass transit, generally
aren't tax-deductible -- not
even if you're conducting
business via your hands-free
cell phone in transit.
The IRS
also puts additional limits on items within allowable expense categories. For
example, although professional memberships generally are allowed, the IRS will
reject dues you pay to a group whose main purpose is to provide entertainment
activities for members and their guests. Similarly, dues to airline, hotel and
luncheon clubs are not deductible.
Work clothing
also has certain standards to meet before the IRS will allow it as a deduction.
And there are additional limits on travel, meal and entertainment expenses.
The
total of your unreimbursed employee expenses is entered on line 21 of Schedule
A. Usually, you'll need to detail your expenses on either Form
2106, Employee Business Expenses, or Form
2106-EZ, Unreimbursed Employee Business Expenses. To count
the depreciated costs of any equipment used in your job, you'll also need Form
4562, Depreciation and Amortization. And as always, when it comes to tax deductions,
good record keeping is a must.
But don't let
these additional forms or the time-consuming task of receipt gathering scare you
off. The extra effort could be worth it if your unreimbursed employee expenses
help you cut your total tax bill.
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Updated: March 6, 2009 |
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