You may use Form 2106 only if you are a qualified employee under limited IRS categories. Most W-2 employees cannot deduct unreimbursed employee expenses for tax years 2018–2025 due to the suspension of miscellaneous itemized deductions under the Tax Cuts and Jobs Act.
Eligible taxpayers use Form 2106 to report allowable employee business expenses and subtract employer reimbursements to determine any deductible amount permitted under current law.
Who can use Form 2106
- Form 2106 is limited to the following taxpayers:
- Armed Forces reservists
- Qualified performing artists
- Fee-basis state or local government officials
- Employees with impairment-related work expenses
- Most other employees are not eligible to deduct unreimbursed job-related expenses on their federal return.
Step 1: Enter Your Expenses (Part I, Step 1)
Line 1: Enter vehicle expenses only if you are an eligible taxpayer (e.g., reservist, performing artist, fee-basis official, or impairment-related work expense claimant). Regular employees cannot deduct commuting or general mileage expenses.
Line 2: Enter lodging expenses only if incurred while traveling overnight for qualified business purposes as an eligible employee.
Line 3: Enter incidental travel expenses (e.g., tips to hotel staff, baggage handling). The optional $5 per day incidental-only method may apply only where permitted under IRS travel rules. It cannot be used if meals are claimed under another method.
Line 4: Enter other allowable employee business expenses only if you qualify under an eligible category. This may include supplies, work-related education required by employer or law, or trade-related expenses. Personal expenses, commuting costs, and general job-related costs are not deductible.
Line 5: Enter meal expenses only if allowed under IRS rules for eligible taxpayers. Generally, meals are subject to the 50% limitation when deductible.
Step 2: Enter Reimbursements Received (Part I, Step 2)
Line 7: Enter reimbursements received from your employer or third parties, including amounts reported in Form W-2, Box 12, Code L.
Reimbursements are not taxable if paid under an accountable plan, which requires:
- Business connection
- Adequate substantiation
- Return of excess reimbursements
Nonaccountable plan reimbursements are generally included in wages.
Step 3: Figure Expenses to Deduct (Part I, Step 3)
Line 9: Apply any applicable limitations, including the 50% limitation on deductible meal expenses when permitted.
For most taxpayers, no deduction is allowed due to the suspension of miscellaneous itemized deductions (2018–2025). Only eligible categories under Form 2106 instructions may proceed to this step.
Important Notes
- Most W-2 employees cannot deduct unreimbursed employee expenses for federal purposes during 2018–2025.
- Only taxpayers meeting the specific eligibility categories may complete Form 2106.
- Allowable expenses must be ordinary, necessary, and directly connected to qualified employment duties.
- Expenses reimbursed under an accountable plan are not deductible.
Source:
Form 2106 Instructions (2025)
Disclaimer: Always verify details with the current Federal or State Department of Revenue Forms and Instructions. Tax laws and forms may change annually.