If
you paid for work-related expenses out of your own pocket, you may be able to
deduct those costs. In most cases, you claim allowable expenses on Schedule A,
Itemized Deductions. Here are six tax tips that you should know about this
deduction.
1.
Ordinary
and Necessary. You can
only deduct unreimbursed expenses that are ordinary and necessary to your work
as an employee. An ordinary expense is one that is common and accepted in your
industry. A necessary expense is one that is appropriate and helpful to your
business.
2. Expense Examples. Some costs that you may be able
to deduct include:
·
Required work
clothes or uniforms that are not appropriate for everyday use.
·
Supplies and tools
you use on the job.
·
Business use of
your car.
·
Business meals and
entertainment.
·
Business travel
away from home.
·
Business use of
your home.
·
Work-related
education.
This list is not all-inclusive. Special rules apply if your employer reimbursed you for your expenses. To learn more, check out Publication 529, Miscellaneous Deductions. You should also refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses.
3.
Forms
to Use. In most
cases you report your expenses on Form 2106 or Form 2106-EZ.
After you figure your allowable expenses, you then list the total on Schedule A as
a miscellaneous deduction. You can deduct the amount that is more than two
percent of your adjusted gross income.
4.
Educator
Expenses. If you are
a K through 12 teacher or educator, you may be able to deduct up to $250 of
certain expenses you paid for in 2014. These may include books, supplies,
equipment, and other materials used in the classroom. You claim this deduction
as an adjustment on your tax return, rather than as an itemized deduction. This
deduction had expired at the end of 2013. A recent tax law extended it for one
year, through Dec. 31, 2014. For more on this topic see Publication 529.
5.
Keep
Records. You must
keep records to prove the expenses you deduct. For what records to keep, see Publication
17, Your Federal Income Tax.
6. IRS Free File. Most people qualify to use free,
brand-name software to prepare and e-file their federal tax returns. IRS
Free File is the easiest way to file. These rules can be complex, and Free
File software will help you determine if you can deduct your expenses. It will
do the math, fill out the forms and e-file your return – all for free. Check
your other e-file options if you can’t use Free File.
Visit IRS.gov/forms to
view, download or print IRS tax products anytime.
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