Reporting Unreimbursed W-2 Job Expenses

Unreimbursed employment expenses are work-related expenses individuals incur out of pocket and their employer does not compensate them for.

Historically, if these costs surpassed 2% of their adjusted gross income (AGI), workers may deduct them as miscellaneous itemized deductions.

The Tax Cuts and Jobs Act (TCJA) of 2017, however, blocked this deduction for most workers from 2018 to 2025.

Who Can Still Claim Unreimbursed Job Expenses?

Though most workers cannot deduct these fees, some specialists can still assert unpaid job-related costs:

• Reservists in the armed forces
• Qualified performers
• State or local government officials on a fee basis
• Workers with impairment-related job costs

Rather than as itemized deductions, some people note their deductions on line 12 of Schedule 1 (Form 1040).

Unreimbursed Job Expense Examples

Should you qualify to deduct employment expenditures, typical ones are:

• Travel for work—meals, transportation, and housing away from home
• Professional membership fees and union dues
• Job-related education keeping or enhancing abilities for your present position
• Specialized work gear or protective apparel
• Equipment and materials required for your work
• Home office costs—if mandated by the company and for its convenience

Reporting Qualifying Expenses

• Establish Eligibility—Should you qualify, verify that your costs satisfy IRS criteria.
• Maintain thorough records by keeping receipts, mileage logs, and other papers to support your assertions.
• Eligible employees—reservists or performing artists among them—must complete IRS Form 2106 (Employee Business Expenses) to determine their deduction.
• Report on Schedule 1—Attach Form 2106 if necessary; total deduction on Schedule 1, line 12.

Non-Deductible Employee Alternative Options

Most W-2 workers cannot deduct unpaid work costs, hence they may look into other options:

• Request reimbursement under a corporate expenditure policy.
• Qualifying medical and work-related costs may be paid with pre-tax money using Flexible Spending Accounts (FSAs) or Health Savings Accounts (HSAs).
• Self-Employment Consideration—Expenses connected to your independent contracting employment could be deductible on Schedule C (Form 1040) if you have side income.

This entry was posted on Thursday, April 3rd, 2025 at 7:40 pm and is filed under Deductions, Income. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.