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What Employee-Related Expenses are Deductible? Clearing Up Some Confusion

Posted on Tuesday, March 22, 2022
by AMAC, D.J. Wilson

The US inflation rate is soaring to a 40-year high in America under the Biden Administration. With rising costs on gas, food, and housing, and tax deadlines looming for millions of Americans, people are trying to be creative on their tax returns with what deductions they can take. However, many W-2 employees end up finding out that expenses they hoped to deduct are simply not eligible. Here are some basic work-related scenarios regarding deductions:

  • An employee of a company is working from home and is required to be on zoom meetings. Is the cost of his home computer equipment deductible? If you are an employee, no. However, if you are self-employed, you may write it off as a business expense or you may deduct depreciation if it is considered a business asset. Something an employee can do, however, is consider asking their employer to pay for their computer if they are required to have one for work.
  • An employee who travels requires a cell phone to make sales calls. Is the cost of a personal cellphone used for business deductible? If you are an employee who uses your personal cell phone to conduct business, you are not able to deduct this expense as it is an unreimbursed employee expense. Companies can, however, provide a mobile device for employees who travel and are required to have one.
  • A business employee moved to take a new job with a large company. Since the employee moved for work, are her moving expenses deductible? Moving expenses are not deductible. However, an employee can negotiate their salary and benefits with their company to ensure that moving expenses are covered. Additionally, people in the military who are on active duty and relocate for a permanent change of station may qualify for deductions on moving expenses.
  • An employee of a company decides to attend college at night to take courses to benefit her career. Can she deduct the costs of her college tuition or books and materials? Credits or deductions for tuition may apply, but income levels may limit deductions. The IRS allows some fringe benefits to be excluded from employee pay and taxes up to a certain dollar amount. This includes books, tuition, and travel expenses to and from school. However, anything over the established threshold is taxable to the employee. People who claim educational deductions may not also claim other education tax credits, so it pays to determine which is most beneficial. Additionally, some employers offer employer-paid educational assistance or tuition reimbursement programs. Some educational benefits over a set amount may be subject to tax.
  • An employee of a company who is using part of the home as office space. Is their workspace a deductible expense? If you are an employee, no. However, self-employed people who use the space as their primary and regular place of business may claim the home-office deduction.
  • An employee travels to and from work by automobile. Is their mileage to and from work a deductible expense? Business miles are considered those driven from a person’s principal place of business. However, not all business miles are deductible. A commute, going from a home to work and vice versa, even for business purposes, is not a deductible expense.
  • The company a woman works for sponsors a charity, and she volunteer at the charity once a week. Are her time or travel expenses deductible expenses? The value of one’s time volunteering for a charity is not a deductible expense. However, charitable travel expenses and contributions an employee makes toward charities qualified by the IRS are deductible expense for up to 50% of one’s income. This excludes gifts to family and friends and go-fund-me pages.

In these financially trying times, it is only natural for people to seek to maximize tax deductions. Since tax laws and regulations are subject to change, it’s always best to consult IRS.GOV and/or a tax professional when in doubt about what to deduct.

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1 year ago

Smart strategy

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