Last weeks Tax Tidbit prompted a great question. Nina asked if there were any tax tips for those of us with un-reimbursed business expenses. If you spend your personal money for business expenses, and your employer does not reimburse you, you may be able to deduct those expenses on your personal tax return.
The IRS Publication 529 outlines details about un-reimbursed employee expenses. A few rules apply. First, you can only deduct expenses which you paid or incurred during your tax year. Second, the expense must be for carrying on your trade or business or being an employee. And finally, the expense must be “ordinary and necessary”. The IRS defines ordinary as being a common expense in your trade, business or profession. The expense is necessary if it is appropriate and helpful to your business. (The expense doesn’t need to be “required” to be considered necessary.)
Here are a few types you may be able to deduct:
Business liability insurance premiums
Dues to a chamber of commerce (if membership helps you do your job)
Dues to professional societies
Home office deductions
Job search expenses if the job is in your present occupation
Laboratory breakage fees
License and regulatory fees
Passport for a business trip
Tools and supplies used in your work
Union dues and expenses
Work clothes and uniforms–if required and not suitable for everyday use
For more information refer to IRS Publication 529. If you are unsure which deductions apply to you, consider hiring a tax professional. They will be able to help you navigate your taxes and obtain all your potential deductions.