For tax years prior to 2018, use the IRS Forms 2106 and 2106-EZ for claiming non-reimbursed expenses you incur during your normal course of work. There are a few factors you'll want to consider when deciding which form to use. For tax years after 2017, unreimbursed employee expenses are no longer deductible.
Beginning in 2018, unreimbursed employee expenses are no longer eligible for a tax deduction on your federal tax return however, some states such as California continue to provide a deduction on your state tax return if you qualify.
The IRS has two different types of Form 2106 that you can use to claim non-reimbursed expenses you incur during your normal course of work. These forms include the 2106 and 2106-EZ. The form you’ll use depends on how you want to treat certain expense deductions and whether you received any partial reimbursements for an expense you're claiming.
Deciding whether to use Form 2106 or 2106-EZ depends on whether you received any reimbursements from your employer for the expenses you’re claiming.
You can use Form 2106-EZ if you received absolutely no reimbursement, but you must use Form 2106 if you received a partial reimbursement and want to claim the remaining non-reimbursed portion of your expenses. A partial reimbursement occurs when your employer pays you back some, but not all, of your cost for the expense.
For example, if you spend $1,000 for tools that are required to perform your job and your employer reimburses you $600, you received a partial reimbursement of $600. In this case, you still have $400 in non-reimbursed expenses to claim on Form 2106.
Deduction for vehicle use
If you’re claiming a deduction for work-related use of your personal vehicle, you can use Form 2106-EZ as long as you’re claiming the standard mileage rate for your use. Claiming this rate is simple, and if you drive a lot for work, this method might generate a larger deduction. However, if you choose to claim actual expenses for your work-related vehicle use, you must use Form 2106. Actual expenses include depreciation and a portion of your auto insurance, fuel, maintenance and repair costs.
Regardless of the method you use, you’ll need to know how many personal and work-related miles you drove during the year. Also, you can only claim a deduction for your vehicle use on the job, not for any use commuting between your home and your place of business.
Other eligible expense
Aside from vehicle expenses, you can include many other unreimbursed work-related expenses on Form 2106 and 2106-EZ. To be deductible, your expense must be ordinary and necessary in your field, and required to maintain employment in your trade or profession. Examples of common expenses include the following:
- Tools and supplies
- Continuing-education classes
- Professional license or certification fees
- Required professional insurance premiums
- Work uniforms and cleaning (does not apply to clothing that is suitable for wear outside of work; expenses for purchasing and laundering this type of clothing are not deductible)
- Deduction for business use of home, if you work regularly and exclusively from home
- Union dues
- Subscriptions to trade journals and magazines
- Resume printing expenses
- Job-search expenses
Itemized deduction and limitations
One last important thing to remember is that Forms 2106 and 2106-EZ are attached to Schedule A as part of your itemized deductions. To receive a tax benefit from claiming itemized deductions, the total of your Schedule A items must equal more than the standard deduction amount the IRS allows you for your filing status.
Amounts you claim on Form 2106 or 2106-EZ are also subject to a 2-percent limitation. This means only the portion of unreimbursed expenses that exceeds 2 percent of your adjusted gross income will be added as a deduction. To receive proper credit for your deduction, calculate all your unreimbursed 2106 items, then apply the limitation.