Tax Deductions:

Expenses Relating to Business

To claim deductions for employee expenses, your client must be able to prove the business purpose as well as the amounts of the expenses incurred. Records and receipts of all expenses indicating the time, business nature and place of the expense should be kept. Employee work related deductions should be claimed as miscellaneous deductions on Schedule A (Form 1040.) However, the overall amount of miscellaneous itemized deductions they can deduct is limited to the amount that is more than 2% of their adjusted gross income. They may be further limited if their adjusted gross income exceeds $126,600 ($63,300 if they are married and filing separately.) Following is a list of commonly overlooked deductions related to employee business expenses.

  • Travel by airplane, train, bus or car between their home and business destination
  • Taxi, public transportation and airport limousine taken to or from the airport, their hotel or work location.
  • Shipping baggage between regular and temporary work locations.
  • Dry cleaning and laundering services while away on business
  • Business calls made while on a business trip (this includes faxes and other forms of communication devices.)
  • Costs incurred for the operation and maintenance of their car when traveling away from home on business
  • Entertainment expenses (The amount they can deduct is generally limited to 50% of their unreimbursed entertainment expenses.)
  • Business gifts (they can deduct no more than $25 for business gifts per person during the tax year.)