Deductible Unreimbursed Employee Expenses – Yes, even you!


Many taxpayers think that because their employer reimburses them for business expenses that they cannot claim a deduction on their tax return, so they don’t even bother to try.  The truth is that you may be incurring deductible expenses above and beyond the ones being reimbursed.  If you think you don’t qualify, read on anyway.

You are the “Chairperson of the Board” when it comes to your own career.  Only you are qualified to decide what expenses are necessary for you perform your job.  Your employer’s company policy strictly limits reimbursable expenses to items authorized by your employer.  But you may recognize the need for a lot of other things that your employer won’t reimburse.  For example, suppose you have a good friend who works for one of your competitors, but in another city.  Visiting your friend to share your experiences is certain to be beneficial to your job performance, but your employer is unlikely to reimburse you for the travel.

Here is a list of common unreimbursed expenses:

  •             Travel (airfare, lodging, ground transportation)
  •             Auto Mileage
  •             Meals and entertainment (including a per diem for out-of town travel)
  •             Education (classes, workshops, seminars)
  •             Books, publications, and subscriptions
  •             Dues for membership in unions or professional organizations
  •             Computers and internet access
  •             Tools and supplies
  •             Cell phone usage
  •             Uniforms, laundry, and special clothing
  •             Job searching expenses (your employer certainly would not reimburse these!)

Additional miscellaneous itemized deductions include:

  •             Tax advice and tax preparation costs
  •             Investment expenses and advice
  •             Costs to maintain or recover income-producing property

The best tax benefit is derived when you can deduct expenses that are normally personal in nature, but which you can qualify as business deductions with a little advanced planning.

For example, a teacher who grew up in Cleveland was invited back to attend his niece’s wedding.  He hadn’t been home for a while and also wanted to see his parents for a few days.  Normally this would be completely a personal expense and not deductible.  But being very tax-mindful and having gone to college in Cleveland, our client contacted a couple of his old teachers to get together and discuss his work on Thursday before the wedding.  He also registered for a ½-day workshop at his old school on Saturday, and promised to participate in a round table discussion for students at the college the following Monday.  So while he was travelling on business to Cleveland, he found himself with nothing to do on Sunday, and took the day off to go to his niece’s wedding.  The tally:  round trip airfare, 5 days per diem, all deductible.

Each of these deductions may have specific rules for record keeping and substantiation, so we recommend keeping all receipts and recording all you activities in a journal or appointment calendar.  IRS Publication 590 is a good roadmap for taking advantage of these deductions.  We suggest that as Chairperson you call a Board meeting and adopt a budget of deductible unreimbursed business expenses for 2016