Form 2106 - Employee Business Expenses

Form 2106 - Employee Business Expenses

Form 2106 is used by certain employees to report job-related business expenses. These expenses may be deductible on your federal tax return, depending on your employment status and the nature of the expenses.

Who Should File Form 2106?

You may need to file Form 2106 if you are one of the following:

• An Armed Forces reservist
• A qualified performing artist
• A fee-basis state or local government official
• An employee claiming impairment-related work expenses

Employees who do not fall into these categories generally cannot use Form 2106 due to the elimination of miscellaneous itemized deductions subject to the 2% floor under section 67(a), which was terminated for tax years beginning after 2017.

What Expenses Can Be Reported?

Form 2106 allows you to report various job-related expenses, including:

• Meals while away from your tax home overnight (Line 5)
• Other job-related expenses such as business gifts, education (tuition, fees, books), trade publications (Line 4)
• Vehicle expenses (using either actual expenses or standard mileage rate)
• Travel and transportation costs

Note: Do not include meals, taxes, or interest on Line 4. Also, educator expenses deducted on Schedule 1 (Form 1040), line 11, should not be included here.

Reimbursements and Accounting Requirements

If you received reimbursements from your employer for business expenses, you must account for them. This means providing documentary evidence such as a statement of expense, account book, diary, log, or trip sheets to verify the amount, time, place, and business purpose of each expense.

Use the Reimbursement Allocation Worksheet (provided in the form instructions) to allocate reimbursements appropriately. Reimbursements reported in Form W-2, Box 1 should not be included in Form 2106.

How to Report Deductions

• Qualified Performing Artists: Include performing-arts-related expenses on Schedule 1 (Form 1040), line 12.
• Armed Forces Reservists: Expenses for travel more than 100 miles from home are deductible on Schedule 1 (Form 1040), line 12, up to the federal per diem rate.
• Impairment-Related Work Expenses: Report these on Schedule A (Form 1040), line 16 (or Schedule A (Form 1040-NR), line 7).

Vehicle Use and Mileage

If you use a vehicle for business purposes:

• You may use the standard mileage rate or actual expenses.
• If you use more than two vehicles, complete a second Form 2106, page 2, for additional vehicles.
• You cannot use the standard mileage rate for five or more vehicles owned or leased simultaneously.

Important Notes

• Section 179 deduction for vehicles is limited to income from your job and any other active trade or business.
• For education expenses, consider claiming a credit via Form 8863 instead of a deduction.
• Always attach Form 2106 to your return if you are claiming deductions under these special categories.

Source:

Form 2106 - Employee Business Expenses

Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.