Every year, some people overpay their
income taxes due to forgotten expenses or overlooked deductions that could
lower their tax liability. Do not let this happen to you.
Tax Service is in the business of saving you money. If you have un-reimbursed
business expenses in the following areas, you might be able to save some
dollars if you:
- Use your vehicle for business purposes
- Travel on business
- Entertain a business associate, Have
job-related expenses, Have education expenses related to your work, Are looking
for a job in your same field, Moved because of a new job, Have educator
expenses, Work from your home, Made purchases for your business
Be sure to maintain records and keep your receipts for all your allowable
Using Your Vehicle for Business
When you use a
personal vehicle for business, you may deduct the business-related mileage
expense by using either the standard mileage rate or the actual expenses of
maintaining the vehicle. The 2015 standard mileage rate is 57.5 cents per mile.
If you take the actual expenses, you can deduct the depreciation, gas,
oil, insurance, tires, licenses, repairs, etc. Make sure you keep written
records of all of your expenses and your total miles and business miles for the
year. If you choose to take actual expenses, you cannot change to the standard
mileage deduction method. The cost of commuting between your home and your work
is not deductible.
For more information on deducting job-related vehicle
expenses, click here.
You may be able to deduct
business travel expenses if you must conduct business away from your tax home
and your employer does not offer reimbursement for these expenses. If your
employer does offer reimbursement for these expenses, but you choose not to be
reimbursed, you cannot deduct those business expenses. The cost of
un-reimbursed transportation, lodging, laundry, dry cleaning, and telephone
expenses are some of the deductible expenses. Generally, meals are only 50%
deductible; however, for certain individuals in the transportation industry
such as interstate truck drivers or airline pilots, the deductible percentage
is generally 80%. Out-of-town convention expenses can also be deducted if not
paid for by your company, so save receipts for your lodging and meals. If the
convention was in town your mileage to and from the convention location may be
For more information on deducting job-related travel
expenses, click here.
If you incur entertaining
costs for business reasons, you may be able to deduct 50% of the amount. The
expense must be considered ordinary or necessary to your profession.
Entertainment includes any activity generally considered to provide
entertainment, amusement, or recreation.
Be sure to keep a record of the
business purpose and a receipt.
supplies, postage, business cards, and long distance charges incurred for your
job that are not reimbursed are deductible.
The uniform your company
requires you to wear may also be a deduction. If the uniform is not suitable
for everyday wear, the cost of the uniform and the upkeep may be
Your professional library can also be a source of tax
deductions. Books, magazines, and journals related to your field can be
deducted. Some other expenses that may be deducted include union dues,
insurance, and professional licensing fees.
If you are an employee, you may be able to deduct work-related education
expenses on your income tax return or exclude your employer-provided
educational assistance benefits from your income.
work-related education must either be education that is required by your
employer or the law to keep your present salary, status, or job, or be
education that maintains or improves skills needed in your present work.
However, qualifying work-related education cannot be education that is needed
to meet the minimum educational requirements of your present trade or business,
or be education that is part of a program of study that will qualify you for a
new trade or business.
You may be able to deduct these
work-related educational expenses as an itemized deduction. You should review
the requirements for qualification, compare the tax benefits each option
provides, and determine which combination gives you the lowest tax
One of the advantages of deducting work-related
education expenses as an itemized deduction is that you can deduct not only the
qualified tuition, books, supplies, lab fees, and similar items, but also
incidental expenses (such as certain transportation and travel costs) and other
educational expenses (such as costs of research and typing when writing a paper
as part of an educational program). You may also be able to deduct local
transportation costs of going directly from work to school. If you are
regularly employed and go to school on a temporary basis, you can also deduct
the costs of returning home from school. You can deduct expenses for travel,
meals (usually limited to 50%), and lodging if you must travel overnight to
obtain qualified education and the main purpose of the trip is to attend a
work-related course or seminar.
If you receive education
assistance benefits from your employer under an education assistance program,
you may be able to exclude up to $5,250 annually. These benefits should not be
included with the wages, tips, and other compensation shown on Form W-2, Box 1
and, therefore, are not reported on your income tax return. Your employer may
report the educational assistance payments on Form W-2, Box 14. Tax-free
education assistance benefits include payments for tuition, fees and similar
expenses, books, supplies, and equipment. The payments may be for
undergraduate- or graduate-level courses. Unlike the education expenses
qualifying as business expenses, the education payments qualifying for this
exclusion do not have to be for work-related courses.
example, Mobi Bello works as a nurse in a public hospital. The hospital
requires him to attend an out-of-town course to keep his nursing skills up to
date. The hospital reimburses for expenses using a non-accountable plan, so the
reimbursement is included in his wages and reported on his Form W-2. His
adjusted gross income is $42,000. Mobi is claiming his expenses as part of his
Mobi's allowed expenses for the course, before the
2% adjusted gross income limit, are as follows:
- Meals ($376 × 50%)
- Course-related books required for enrollment.............. +$180
- Total course expenses
- Round-trip miles driven to and from the
course ...........350 miles
- Standard mileage rate
- Total car
Total deductible expenses
Mobi's allowable deduction is limited to the amount that is greater than 2%
of his adjusted gross income, or $840 ($42,000 x 2%). He can deduct $1,854
(2,694 - $840) of the expenses.
If you are
looking for a job in your current profession and can itemize your deductions,
certain expenses may qualify as miscellaneous deductions. Employment agency
fees, resume preparation and printing, phone calls, miles driving to and from
the interview, and mailing expenses are examples of deductible items. The
expenses for an out-of-town interview are deductible if you are paying for
If you have moved in the last year and
your move was job-related, you may be able to deduct the cost of moving your
household goods and your traveling expenses. Generally, your new main job
location must be at least 50 miles further away from your former home than you
old main job location was from your former home, and the move must have been
because of your new employment. The standard mileage rate for moving is 23
cents per mile. You do not have to itemize deductions to claim your moving
For more information on deducting your job-related moving
expenses, click here.
If you are an eligible
educator and have qualified expenses, you may be able to deduct up to $250 as
an adjustment to income directly on Form 1040. You can deduct the expenses that
exceed this amount as an employee business expense on Schedule A.
Qualified expenses include the cost of classroom supplies such as bulletin
board materials, copy paper, computer programs, books, awards for students, and
extra supplies for students.
Qualifying Home Office Deductions
A home office may qualify for deduction if you used it exclusively and
regularly for your trade or business. The business part of your home must be
your principal place of business, a place where you meet or deal with patients,
clients, or customer in the normal course of your business, or a separate
structure you use in connection with your trade or business. Home office
deductions cannot be more than the total wages that are related to the business
use of your home. If expenses are greater than total wages, you must carry over
the nondeductible expenses to the following year. As an employee, the business
use of your home must be for the convenience of your employer and you cannot
rent any part of your home that you use for business to your employer.
Generally, home office expenses for an employee are deductible on Schedule
If you purchased a computer or cellular
phone and you use it for business, you may be able to claim a depreciation
deduction. Your employer must require you to have the phone or computer as a
condition of employment and you must use them for the convenience of your
employer. You must keep a record of the personal and business use of the
computer or phone to determine the percentage of business use.
purchase certain qualifying equipment, you may deduct the cost by making a
section 179 expense deduction.
These and other unreimbursed
expenses you have for work can be deducted if you itemized deductions. You can
only deduct the expenses that are greater than 2% of your adjusted gross
income. In some situations, you may first need to use Form 2106, Employee
Business Expenses, to enter your expenses. If you are reimbursed by your
employer for your business expenses, you first need to determine if you are
being reimbursed under an accountable plan or a nonaccountable plan. Your
employer should be able to tell you which plan applies to you. Under an
accountable plan, reimbursements are not included in income and expenses are
not allowed as a deduction. However, if your expenses are more than the
reimbursement you received you may be able to deduct the unreimbursed expenses
on your return. Amounts paid under a nonaccountable plan are included on your
Form W-2, Box 1 and can be deducted.
Contact your neighbhorhood
Jackson Hewitt office for more information or assistance in identifying all
deductions for which you are eligible. Use the Office Locator available on this
Web site or call 1-800-234-1040 to find the Jackson Hewitt location most
convenient to you.