Thursday 26 February 2015

What Are Deductible Work Expenses

The Internal Revenue Service does not limit work expenses to business owners. There are some deductions that you can claim as an employee if your employer does not reimburse you for the expense. You must retain your receipts or other documentation to verify the deduction if the IRS audits you and, typically, you can only deduct expenses that exceed a percentage of your adjusted gross income.


Work Expense Deduction Qualifications


The IRS regulates what you can claim as a deductible work expense. Along with no reimbursement, the expense must be from the year you are filing. The expense must be ordinary and necessary for your trade or business. Ordinary expenses are expenses that are typical for your industry and necessary expenses are expenses that are help you perform your job.


Two Percent Limit


Only the amounts of your expenses that are more than 2 percent of your adjusted gross income are deductible. For example, if your AGI is $50,000, your expenses must total more than $1,000 before you can claim a deduction. If your expenses total $1,500, you can only claim the amount over $1,000 or, in this instance, $500.


Allowed Expenses


You can have more work-related expenses than you realize. If you must have your own computer to do your job, you can deduct its cost or depreciate the purchase over three years. You can deduct the cost of tuition and fees if you go to school to further your current career. Any dues that you pay to a union or professional organization, malpractice insurance or subscriptions to magazines having to do with your career are deductible. Uniforms and tools specific to your job are deductible as well.


Disallowed Expenses


You cannot deduct your commuting costs from your taxes. While, yes, the cost of getting back and forth to work are absolutely ordinary and necessary for your job, the IRS considers your normal travel expenses as a cost of working and will disallow the deduction. Other disallowed expenses include any illegal expenses, broker's commissions, campaign expenses and personal disability premiums. You cannot deduct the cost of attending a stockholder's meeting unless your attendance is mandatory for your job even if you own stock in the company.


Educators


As of 2011, teachers and other educators can deduct up to $250 each year for out-of-pocket expenses without applying the 2 percent rule. You must use the money toward supplies, books or other materials that you will use in your classroom. Spouses who file joint returns can claim up to $500 if you are both eligible educators. To claim the deduction, you must work with kindergarten through 12th grade for at least 900 hours a year.

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