Many employees today are using their own resources to provide certain miscellaneous items that help their employer’s business run more efficiently. Unfortunately these expenses are not being reimbursed or employees are afraid to ask for 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 at business related roles, home-work activities or multiple job sites, then you may be entitled to request a company reimbursement or claim a tax deduction for your un-reimbursed expenses. Here are some of the most shared costs that employees may be able to deduct if not reimbursed.
1. Business Miles: If you use your own means for any business purposes, keep track of you mileage, you may be able to deduct them at 51 cents per mile (2011 figure). If you travel between job sites during the day, make bank deposits, deliver packages or materials or excursion as an outside sales person, your miles can add up to a large tax savings.
2. Travel Expenses: If you are required to travel overnight for any business related purpose without being reimbursed, your costs are deductible. Conferences, continuing education trips, off site training programs or at any rate other business related trip costs are deductible. Make sure to keep receipts and a log book.
3. Parking and Tolls: If you are paying tolls or already certain parking fees as part of your work, you may be able to deduct them. Daily commuting tolls are not deductible, but any other tolls are. If you work in a downtown area and your employer does not provide on-site parking, your parking fees for off-site parking may be deductible. Keep your receipts and let your tax adviser know.
4. Uniforms: Uniforms are often overlooked. Whether it is nurse uniforms or steel-toed work boots, they are a job requirement. While some employers provide them, many others do not. If you find that you are purchasing clothing items that are used exclusively at your job and would not be used for everyday use, they are probably deductible expenses.
5. Association Dues: Any fees or dues that you pay as part of your work relationship, are deductible. If you pay for notary public, specialized association, re-certification, licensing or union dues, you can take a deduction for these items in addition.
6. Meals and Entertainment: Many employees these days are being asked to work overtime, are “on call” or travel between job sites. If you incur meal costs during these special work events, keep receipts and take your deduction. If you entertain customers or clients during or after hours, your expenses are also deductible if they are not reimbursed.
7. Others: There are a few other expenses that can be deductible to an average employee. Certain business gifts, office supplies for a home office (if you do any work at home), job seeking expenses, software training or books may be deductible if you pay for them out of your own pocket. Keep track and ask your tax adviser if you are eligible.
Summary: Employees that incur expenses out of their own pocket may be entitled to an income tax deduction for these costs. But if you do not keep track of your expenses or ask your tax adviser, you will lose the savings. Most tax preparers and accountants are stressed during tax season and use very little time asking questions about these expenses unless you offer the information. Don’t lose out on your savings. It could be enough to pay for your tax preparation fees or already enough to fund an IRA. Either way… you win.
To discover additional financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.