You don’t have to own a business to deduct costs related to your job. It’s also possible, in some cases, to deduct the unreimbursed expenses you incur as part of doing your job. Realize, though, that the IRS has rules regarding your tax deductions. You can’t just deduct whatever expenses you want, and you have to meet certain requirements if you want to deduct your job expenses from your income.
In general, any expense that is required for your job, but your employer doesn’t reimburse you for, is tax deductible. Here are some of the guidelines for tax deductible expenses:
In addition to these requirements, you can only deduct your job expenses if they add up to more than 2% of your adjusted gross income (AGI). You’ll only be able to deduct the amount that goes beyond that 2% of AGI. So, if your AGI is $45,000 a year, you need to pay more than $900 in business expenses to deduct. And if you paid $1,200, only $300 of it is tax deductible.
Some of the job-related expenses you can deduct include:
If you plan to take advantage of tax deductions for job costs, make sure that you keep good records. Save your receipts, and count them up at the end of the year. If you plan to deduct a portion of the cost of a meal you bought for a client, make sure you write down information related to the meeting, including who the client is, and what you discussed. If you are audited, you will want this information readily available in order to back up your case.
When in doubt, consult with a knowledgeable tax professional. The right tax professional can help you determine which expenses are truly tax deductible, and which are a bit of a stretch.
If you are required to spend money in order to keep your job, you can deduct those costs. Keep track of eligible expenses, and then tally them at the end of the year. If your expenses amount to more than 2% of your AGI, you might be able to deduct the costs from your income for tax purposes. The deduction might seem small, but every little bit helps.
Photo from StockMonkeys.com.
If you like this article, please sign up for free weekly email updates.
I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
In accordance with FTC guidelines, I state that I have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.
Any references to third party products, rates, or websites are subject to change without notice. I do my best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.