Where to Deduct Business/Work Expenses?

Have you ever heard anyone say, "I will just write this (expense) off on my taxes." What are they referring to? For example and brevity sake, let's assume they are referring to their personal tax return. There are a few places where you could put legitimate business expenses on a personal tax return. First off, do you own a business or is this unreimbursed employee expense? These are two very different options. Be sure you know the difference so that you claim expenses in the correct place.  

If you own a business or are a contract laborer (receive 1099-MISC), you would report your income and expenses on "Schedule C – Profit or Loss From Business". This is fairly straight forward. The expense would be deducted from the income.

The unreimbursed employee expenses are a little more tricky. These expenses are reported on Schedule A Itemized Deductions. Let's start with the basics. Do you itemize? You generally would if you have mortgage interest and real estate taxes. If the answer is no, you most likely will not see (or deduct) unreimbursed employee expenses on the tax return as that is where they would have been reported.

 Alternatively, let's say that you do itemize. The unreimbursed employee expenses would be reported on Schedule A Itemized deductions on line 21. There is a catch, though. You can only deduct the portion that exceeds 2% of your adjusted gross income (line 37 on 1040). There is a chance that if the unreimbursed employee expense is small and your income is high, you still would not actually receive a benefit.

It's important to make sure you are reporting these items correctly. Please contact us for more information.