Many employees today are using their own resources to provide certain sundries that help their employer’s business run more efficiently. Unfortunately, these expenses are not reimbursed or employees are afraid to request reimbursement. The good news is that the IRS may allow you to get some tax relief in these circumstances.
If you find that you are spending your own money on business-related functions, work-from-home activities, or multiple job sites, then you may be entitled to request a refund from the business or claim a tax deduction for your unreimbursed expenses. These are some of the most common costs that employees can deduct if they are not financed.
1. Business miles: If you use your own vehicle for any business purpose, keep track of your mileage, you can deduct it at 51 cents per mile (2011 figure). If you commute between job sites during the day, make bank deposits, deliver packages or materials, or drive as an outside vendor, your miles can add up to big tax savings.
2. Travel expenses: If you must travel overnight for any business-related purpose without receiving reimbursement, your costs are deductible. Lectures, continuing education travel, off-site training programs, or any other business-related travel costs are deductible. Be sure to keep receipts and a log book.
3. Parking and TollsNote: If you’re paying tolls or even certain parking fees as part of your job, you may be able to deduct them. Daily commuting tolls are not deductible, but any other toll is. If you work in a downtown area and your employer does not provide on-site parking, your off-site parking fees may be deductible. Save your receipts and inform your tax advisor.
4. Uniforms: Uniforms are often overlooked. Whether it’s nurse uniforms or steel toe work boots, they’re a job requirement. While some employers provide them, many do not. If you find that you are buying clothing items that are used exclusively at work and would not be used for everyday use, they are probably deductible expenses.
5. Association Dues: Any fee or fee you pay as part of your employment relationship is deductible. If you pay for a notary public, professional association, recertification, license, or union, you can also take a deduction for these items.
6. Meals and Entertainment: Many employees these days are required to work overtime, be “on call” or travel between job sites. If you incur food costs during these special work events, save your receipts and take your deduction. If you entertain customers or clients during or after business hours, your expenses are also deductible if not reimbursed.
7. Others: There are some other expenses that may be deductible for an average employee. Certain business gifts, office supplies for a home office (if you do any work at home), job search expenses, software training, or books may be deductible if you pay for them out of pocket. Keep track and ask your tax advisor if you’re eligible.
Resume: Employees who incur out-of-pocket expenses may be entitled to an income tax deduction for these costs. But if you don’t track your spending or ask your tax advisor, you’ll lose your savings. Most tax preparers and accountants are stressed during tax season and spend very little time asking questions about these expenses unless you offer them the information. Don’t lose your savings. It could be enough to pay your tax preparation fees or even to fund an IRA. Either way… you win.
To discover additional financial and tax strategies, check out my blog or download their FREE Wealth Expansion Kit by clicking here. The first step to building wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.