A Tax payer can avail job related expenses as an itemized deduction in the tax return. All the expenses incurred should be towards business and must not be reimbursed by the employer. These expenses should be common and is accepted in your profession to be claimed as a deduction. Only unreimbursed employee expenses can be deducted.
Some of the types of unreimbursed employee expenses that can be deducted are –
- Temporary Assignment means any work assignment away from home to a client location away from regular office which is expected to last not more than a year. HERE THE INTENT OF THE ASSIGNMENT IS IMPORTANT. If your assignment at the start of the project is supposed to be for more than 12 months, then YOU CANNOT take a deduction. TAKE AN INDEPTH READING OF YOUR OFFER LETTER/ DEPUTATION LETTER/LETTER OF INTENT ISSUED BY YOUR EMPLOYER. YOU ARE RESPONSIBLE FOR INCORRECT DEDUCTIONS ON YOUR TAX RETURNS. Refer to our blogpost
Travel expenses include cost towards transportation to client location, Meals and lodging, Taxi fares, laundry expenses etc. Expenses receipts/bills wherever required has to be maintained by the taxpayer. IRS requires that this be maintained & produced by the Tax payer in case of an IRS audit.
- Travel, Transportation, meals and lodging – Any employee who incurs business related expenses for travel away from home will be able to deduct these expenses. The travel expenses are those which are incurred while travelling from home to office on a temporary assignment.
- Local transportation expenses are those expenses which are borne towards getting to the workplace when you are not away from home. This will include the cost of usage of your car.
- Home office – If you use part of your home as office , you can deduct expenses and depreciation related to the business use of your home
- Meals and Entertainment – An employee can claim deduction for only 50% of their business related meals.
- Local Lodging – You can claim deduction towards lodging expenses if it is on a temporary basis. If your employer provides the lodging or reimburses you for the cost of the lodging, you can deduct the cost only if the value or the reimbursement is included in your gross income because it is reported as wages on your Form W-2.
- Dues towards membership required by the job.
- Depreciation on Computer and Cell phones – Depreciation on these assets can be claimed if it is a must for your profession and use it to carry on your employer’s business.
- Subscriptions to professional journals , magazines and books related to your work
- Work related education – Any expenses that are borne towards education that is required for your job and improves your skills.
Proper care and diligence has to be exercised while claiming any expenses. They have to be strictly as per the IRS Code, Regulations, and Revenue rulings.
Disclaimer – DO NOT take any decision or compute numbers on your tax return, based on the contents of this post. We suggest that you visit a Tax professional to get professional advice on any tax subjects. Contact www.mytaxfiler.com at firstname.lastname@example.org or (972)-351-8899 for a proposal on US, Indian or UK tax planning, preparation, filing, or representation services.