Employee Business Expenses (May 2017)

Tax Tips

Employee Business Expenses

By Michael Aston, E.A.
Alhambra Tax Center


If you pay work-related expenses that not reimbursed by your employer, you may be able to deduct them. Generally, you itemize the expenses as a miscellaneous deduction on Schedule-A. (I say generally, because there are a few exceptions. But we’ll discuss those in the future.)

For the unreimbursed business expenses to qualify, they must be Ordinary and Necessary:

An “Ordinary” expense is one that is common and accepted in the industry.

A “Necessary” expense is appropriate and helpful to a business.

Below are some examples of potential business expenses:

·       Required work clothes or uniforms not appropriate for everyday use. A police officers uniform could be a deduction but a suit a lawyer wears will not be deductible.

·       Supplies and tools for use on the job.

·       Business use of a car. Driving your car for the benefit of your employer and not being reimbursed for miles or driving from your first job to your second job could be a deductible. Commuting to and from your home is never deductible. If you are not good at keeping a mileage log there are some apps for your smart phone which can keep track for you. These apps will base your mileage using GPS and are acceptable form of a mileage log. Most of these APPs are free or little money to purchase.

·       Work related education, assuming no other education credits are being used for the same expense.

·       The business percentage of you telephone expense.

For a more detailed list, go to IRS Publication 529 or Publication 463.

Keeping good records for proof of expenses is crucial and should not be overlooked. IRS Publication 17 has more information of what records to keep. Also as I mentioned above, there are now apps that can simplify your record-keeping.

For more information you can go to www.irs.gov for the federal return, www.ftb.ca.gov for the California return or speak to your tax professional.