Unreimbursed employee business expenses are allowed as a miscellaneous itemized deduction provided they exceed two percent of your adjusted gross income when combined with all your other miscellaneous expenses. This fact causes most taxpayers to miss out on the deduction. However, if you keep careful records of all your expenses, you may well meet the two-percent floor. In addition to these requirements, the expenses must be ordinary and necessary business expenses. An expense is ordinary if it is common and accepted in your type of business. An expense is necessary if it is appropriate and helpful to your business.
The most common types of deductible employee business expenses are professional dues, safety equipment required by your employer, and business travel. You may also take deductions for the cost of uniforms and other special work clothes that are not suitable for everyday wear, including the cost of cleaning the clothing. Some other commonly overlooked employee business expenses include:
- Depreciation on a computer or cellular phone required by your employer.
- Job search expenses for a new job in your present occupation.
- Licenses and regulatory fees.
- Passport for a business trip.
- Subscriptions to professional journals and trade magazines related to your work.
- Tools and supplies used in your work.
- Damages paid to a former employer for breach of an employment contract.
- Business liability insurance premiums.
- Home office required by your employer and used regularly and exclusively.
- Dues to a chamber of commerce if membership helps you do your job.
- Education that maintains or improves your job skills or required by your employer.
- Transportation costs for going between job locations in the same work day.