If you have expenses related to your work, they may be deductible on your tax return.
There are a couple of basic rules. The first is that you must be able to itemize. The second is that 2% of all income on your tax return must be deducted from your work related expenses and the amount left over applies to the itemizing figure, whether it is related to the work or not. If your spouse works, 2% of their income is deducted from your work expenses. For example, if all the income is $40,000, you cannot use the first $800 of your work related expenses.
The expenses can be listed if you had expenses that were reimbursed by your employer but included as income on your W2. Or, they were not reimbursed but were required to perform your work.
You are allowed to take any and every expense that is related to creating your income. However, you are required to have receipts for every expense. Even though we are not required to see your receipts, IRS will require you to produce them if you are audited. Some expenses are not written off during the year you bought them and may have to be written off over a period of years, this is called depreciation. Travel, entertainment and meal expenses have very special rules. Auto mileage records must be kept separately and logged as to dates, distances, places travelled to and what for.
If you are required to work out of your home (or apartment) and have an area that is used only for your work, there may be deductions that you can take for ‘Business use of your Home’. This also applies if you have no option other than to work out of your ‘home’. To claim business use of your home, you need the square footage of your work area and the square footage of your whole house (or apartment). Items that are allowable to calculate the deduction include home insurance, taxes, interest, repairs, maintenance and utilities and some other household expenses.
There is a time limit for how long records should be kept. However, if IRS feels that fraud was committed, there is no limit as to how far they can go back. Under any circumstances, all records should be kept for a minimum of three years after the due date, or actual filing date of the tax return, whichever is later. We recommend that you keep your records for a minimum of seven years.
On this website we have the kinds of expenses you are allowed to take for several different work related occupations. The lists are not necessarily all inclusive, so if you have a questionable item, be sure to mention it. Things like Job Search expenses may be allowable
Click on the following occupations to get an idea of the kind of expenses that can be allowed. Print the page and make notes next to each item as to the amount spent.
