If you incur expenses related to your job that are ordinary and necessary for your job, you can deduct these expenses using Form 2106. Ordinary expenses are common and accepted to your profession, and an expense is necessary if it is helpful and appropriate for your business. Your employer does not have to require you to pay these expenses in order for you to be able to deduct them. But keep careful records so you can prove the eligibility of your expenses.
Do You File?
If you were reimbursed for all of your expenses, you do not need to file Form 2106 unless you used your own vehicle for your job.
2 Percent Limit
Employee business expenses plus all of your other miscellaneous itemized deductions are deductible only to the extent that they exceed 2 percent of your adjusted gross income. If all of your miscellaneous itemized deductions do not exceed the 2 percent, do not file Form 2106.
Line 1 of Form 2106 is for vehicle expenses. Part 2 of the form details how to calculate the entry for line 1, and you should complete it first. Section A of part 2 calculates the business portion of deductible expenses for your vehicle. Section B calculates your deduction based on the standard mileage rate of 55.5 cents per mile in 2012, with Section C used for actual vehicle expenses. Section D is for vehicle depreciation; you need to complete it only if you are claiming deductions for actual expenses.
Enter your expenses for parking, tolls or other transportation not related to your own vehicle on line 2. Do not include commuting expenses. Line 3 is for travel and lodging expenses away from your home overnight. You can also deduct $5 per day in incidental expenses while away if you do not claim any meal expenses or actual expenses during a particular trip. Examples of incidentals are mailing costs for travel vouchers or fees and tips for hotel staff.
Line 4 is for other business expenses, including business gifts and trade publications. You also report the cost of tuition or other training that you pay for here. A home office deduction is also reported on this line, but you must also file Form 8829 to claim a deduction for home office expenses.
Line 5 is for meals and entertainment. You can enter the actual cost of your meals, or use a standard meal and entertainment rate of $46 per day for each day you are away. Meals and entertainment are entered in column B, unlike other expenses.
Any reimbursements you receive from your employer for employee business expenses must be listed on line 7. Enter reimbursements for all meal expenses in line 7, column B, and all others are entered in column A.
Completing the Form
Subtract the reimbursements on line 7 from the total expenses on line 6 and enter the total on line 8 for columns A and B. If you were reimbursed for all of your expenses, you cannot claim a deduction. If you were reimbursed more than you paid in expenses, you must claim the extra as income. Carry the line 8, column A total to line 9, but multiply column B by 0.5, as only half of meal and entertainment expenses are deductible. If you are subject to Department of Transportation hours of service rules, multiply column B by 0.8, and enter the total on line 9, column B. Enter the total of column A and B for line 9 on line 10.
Where to Enter the Total?
Enter the total from Form 2010, line 10 onto Schedule A, Itemized Deductions, line 21 for employee business expenses. If you are a performing artist, an Armed Forces reservist, a fee-basis state or local government official, :or claiming deductions for job equipment due to a disability, enter the total directly on Form 1040, line 24.