Tax Strategies & Credits
Five Tips You Should Know About Employee Business Expenses
If you itemize deductions on your federal income tax return, then you are able to deduct the costs of any qualifying work-related expenses that you pay out of pocket. As long as these expenses add up to over two percent of your adjusted gross income, they can be claimed.
There are clear guidelines regarding which business expenses are eligible for these deductions.
Here are the five things that you need to keep in mind:
In order for a work-related expense to be eligible for a deduction, it must be considered ordinary and necessary. This is defined as being normal, common and accepted in your industry or helpful and necessary to the business that you are in.
Examples of qualifying expenses include supplies and tools used in your job; uniforms or work clothes that you could not or would not wear outside of the job; the use of your vehicle for business (not to get to and from work); entertaining and meals to further business; travel away from home to further or accomplish business; use of your home for business; educational expenses related to your work. It is important to remember that you may not include any expenses for which your employer reimbursed you.
When you have paid these types of expenses, you should list them on Schedule A as miscellaneous deductions then report them using Form 2106 or Form 2106-EZ.
Those who teach grades Kindergarten through 12th grade are able to deduct up to $250 on their out of pocket expenses for supplies, books, equipment or other classroom materials. Teachers do not list this deduction as an itemized deduction; instead they simply take it as an adjustment on their return.
It is very important that you keep all receipts for expenses that you pay in order to provide documentation if needed.
Ralph Estep, Jr.
Ralph Estep, Jr. is a tax accountant and tax preparer based in Middletown, Delaware. Ralph Estep, Jr. and Saggio Accounting+PLUS, Inc. has the expertise to provide you with the services that you need. Dedicated to keeping our tax preparation skills honed with continuing education courses throughout the year, we are highly qualified to prepare tax returns for all fifty states. Our goal is to make the preparation process as easy as possible for you and minimize your tax liability with careful planning. Your tax preparation interview can be conducted either in person, by mail, or e-mail - whichever is most convenient for you. Whatever your circumstances may be, we are here to give you the best advice to help you get through life's challenges. Whether you need current year returns prepared or need to plan for retirement or your child's education, the Saggio Accounting professional team can assist you with all of your needs. This office provides many services, including the following: - Individual Tax Preparation - Accounting & Bookkeeping - Business Tax Return Preparation - Gift & Estate Tax Return Preparation - Partnership & Corporate Tax Preparation - Estate and Succession Planning - Tax & Education Planning - Out-of-State Returns - Business Start-Ups
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