What Kinds of Deductions Can I Use for Work?
The U.S. tax code allows employees several tax deductions for out-of-pocket expenses related to their work. You cannot claim expenses that your employer reimbursed, and you must itemize on Schedule A in order to claim any work-related deductions. These deductions are subject to a 2 percent income exclusion, meaning you can only deduct expenses that exceed 2 percent of your adjusted gross income.
You may be able to deduct certain work-related education expenses. To qualify, the education must be required by your employer or by law or regulation in order to keep your present job, salary or status. You can also deduct education that maintains or improves skills needed in your line of work. Deductible education expenses include tuition and fees, books and supplies, and costs of local travel to school. You can’t deduct costs of education needed to meet the minimum educational requirements for entry into your business or trade or that qualifies you for a new business or trade. For example, a lawyer can't deduct the costs of obtaining a law degree but could deduct the costs of a course on the latest developments in divorce law.
You can deduct the costs of local travel between your main workplace and a temporary work location, such as a construction site or consulting job. You can also deduct travel from your home to a temporary workplace and travel from your main workplace to a second job. If you drive, you can deduct the mileage rate allowed by the IRS. If you use public transportation, you can deduct your fares. If you travel out of town overnight on business, you can deduct costs of travel, lodging, meals and business-related entertainment. You can never deduct commuting costs between your home and your main workplace.
You can deduct the operating, maintenance and depreciation costs of operating a home office. The office space must be your principal place of business, and it must be used exclusively for business purposes. You can't use the space to manage personal accounts, store personal property or as a home entertainment center. It must be maintained by you for the convenience of your employer as a substitute for an employer-provided workplace. If your employer provides a convenient workplace, you can't deduct home office costs, even if you never use the employer-provided workplace.
Other miscellaneous work-related deductions include costs of work uniforms and tools, licenses and regulatory fees, occupational privilege taxes, business liability and malpractice insurance, dues to unions or professional societies, subscriptions to trade publications, and legal fees related to your work. You can also deduct expenses you incur in looking for a new job in your present occupation. These would include items like costs of preparing and mailing resumes and travel costs to job interviews. You can't deduct costs of finding your first job or a new job in a different line of work.
Herb Kirchhoff has more than three decades of hands-on experience as an avid garden hobbyist and home handyman. Since retiring from the news business in 2008, Kirchhoff takes care of a 12-acre rural Michigan lakefront property and applies his experience to his vegetable and flower gardens and home repair and renovation projects.