How Do I Deduct Unreimbursed Employee Expenses? + FAQs

Most W-2 employees can’t deduct unreimbursed job expenses on federal taxes under current law.

The Tax Cuts and Jobs Act (TCJA) of 2017 suspended this deduction from 2018 through 2025 for the average employee. If you’re a typical employee with expenses like travel, tools, or a home office that your employer didn’t reimburse, you generally cannot write those off on your federal return right now.

There are important exceptions and strategies. Certain workers – like Armed Forces reservists, qualified performing artists, fee-basis government officials, and employees with impairment-related expenses – can still deduct their work costs. These qualified individuals use Form 2106 to claim expenses as an above-the-line deduction, reducing their Adjusted Gross Income (AGI).

A few states allow unreimbursed employee expense deductions on state income tax returns, even though federal law doesn’t. Below, we’ll break down exactly how the rules work before 2018, after 2018, and today, explore all exception categories, and explain how to claim these deductions at both the federal and state level.

We’ll also cover the various types of job expenses (travel, tools, uniforms, education, remote work costs), provide real-world examples, and highlight common pitfalls to avoid. Let’s dive in!

Tax Reform Shock: Deductions Before vs. After 2018 🕰️

Before 2018: There was a time when unreimbursed employee expenses were deductible for many people. Prior to the 2018 tax year, if you were a W-2 employee who itemized deductions, you could claim qualifying job-related expenses on your Schedule A (Itemized Deductions).

These expenses – things like union dues, job travel, tools, professional fees, and other out-of-pocket work costs – fell under the category of “miscellaneous itemized deductions.” They were subject to a 2% of AGI rule, meaning you could only deduct the portion of your miscellaneous expenses that exceeded 2% of your adjusted gross income. In practice, an employee with $50,000 AGI and $1,500 of unreimbursed expenses could deduct the amount over $1,000 (which is 2% of $50k).

This setup allowed employees to offset some of their work costs against taxable income, but only if their total itemized deductions (including these expenses and others like mortgage interest or charity) beat the standard deduction.

After 2018 (TCJA changes): The landscape changed dramatically with the TCJA, passed in late 2017. Starting with tax year 2018, miscellaneous itemized deductions subject to the 2% rule were completely eliminated on federal returns. This meant that unreimbursed employee business expenses were no longer deductible at all for most taxpayers from 2018 through 2025.

Congress made this change to simplify the tax code and balance out the large increase in the standard deduction. As a result, employees could no longer offset their W-2 income with unreimbursed expenses like they used to.

For example, work-related travel, uniform costs, union dues, and even home office expenses (for employees) ceased to provide any federal tax benefit for the majority of workers. This was a shock to many, especially those who regularly spent significant money out-of-pocket for their jobs (think traveling salespeople, technicians buying their own tools, or remote workers setting up home offices). Many found that starting in 2018, their taxable income stayed higher because they lost these write-offs.

Today’s rules (2023-2025): As of the current tax year, the TCJA limits are still in effect. Most W-2 employees cannot deduct unreimbursed expenses on their federal tax return. If you file your taxes now and try to list ordinary work expenses on Schedule A, you’ll find no place to claim them (the line for “Job Expenses” is gone).

The only way an employee can currently get a federal tax deduction for unreimbursed expenses is by qualifying for a special exception (detailed in the next section). It’s also worth noting that because the standard deduction nearly doubled in 2018 and continues to rise with inflation, far fewer people itemize at all.

Even before 2018, many employees with moderate expenses got limited benefit due to the 2% threshold and because they might choose the standard deduction over itemizing. Now, with itemizing less common and the deduction disallowed, planning to deduct unreimbursed expenses is largely off the table—unless you meet an exception or your state offers relief.

Future outlook (post-2025): The current disallowance of unreimbursed employee deductions isn’t permanent. Under the TCJA’s provisions, miscellaneous itemized deductions are set to return in 2026 (when many tax provisions sunset) unless new legislation extends the ban. This means that, starting with tax year 2026, employees might once again be able to claim these expenses on Schedule A (likely with the old 2% AGI limitation) if Congress doesn’t act to change the law further.

Some experts anticipate discussions in Washington about whether to reinstate or permanently eliminate these deductions. There have even been legislative proposals, like the Tax Fairness for Workers Act, aiming to restore certain deductions such as union dues and other unreimbursed costs sooner. Industries hit hard by the change (for instance, entertainment unions) are lobbying for relief, evidenced by efforts like the Performing Artist Tax Parity Act to expand deductions for performers.

For now, though, employees should operate under the assumption that unreimbursed job expenses remain non-deductible federally through the end of 2025. It’s a good idea to stay tuned for tax law updates as 2025 approaches, especially if you incur substantial work expenses.

Hidden Loopholes: Who Can Still Deduct Unreimbursed Expenses? 🔍

The general rule might be “no deduction,” but several categories of employees get special treatment. If you fall into one of these buckets, the tax code carves out a loophole so you can deduct your unreimbursed job expenses above the line (directly reducing your gross income).

These exceptions were preserved even after 2018, recognizing that certain jobs involve out-of-pocket costs that Congress felt should remain deductible. Let’s explore each special category and what it means:

• 🎖️ Armed Forces Reservists: If you’re a member of a reserve component of the U.S. military (Army Reserve, Navy Reserve, National Guard, etc.), you may deduct some travel expenses incurred for reserve duties. The key rule is the “>100 miles” test: when you travel more than 100 miles from home to attend drills, training, or reserve meetings, you can deduct related costs.

  • Eligible expenses include things like mileage on your vehicle (at the standard military rate), lodging, half the cost of meals, parking, and tolls for those trips. This deduction is taken as an adjustment to income (no need to itemize) on your Form 1040. You’ll use Form 2106 to compute the allowable amount.

  • There is a cap: you can only deduct up to the regular federal per diem rates for lodging and meals and the standard mileage rate for driving – any excess beyond those rates technically would be a miscellaneous itemized deduction (which currently yields no federal benefit). In practice, most reservists just deduct within the allowed rates. This exception acknowledges that reservists often travel at personal cost to serve, and it ensures some tax relief for that service.

• 🎭 Qualified Performing Artists: Entertainers with modest incomes and multiple gigs can still deduct their work expenses. The IRS defines a qualified performing artist through a few criteria:

  1. You’ve worked for at least two different employers in the performing arts during the year (for example, two theaters, or a theater and a TV studio).

  2. You earned $200 or more from each of at least two of those employers.

  3. Your related expenses exceeded 10% of your gross income from performing arts.

  4. Your AGI (before deducting these expenses) is $16,000 or less for the year (if married filing jointly, certain conditions apply, effectively the $16k applies to each spouse’s income).

  If you meet all the above, congratulations – you are a “qualified performing artist.” This status lets you deduct your acting, music, or performance-related expenses as an adjustment to income. You’d list things like agent fees, audition travel, costumes, instruments, or stage makeup on Form 2106. For example, a stage actor making $15,000 a year who spends $3,000 on costumes and travel for shows can deduct those costs even under today’s law. The deduction will reduce your AGI, which can also potentially lower other taxes or help you qualify for credits.

  • This exception exists because performers often have high expenses relative to low incomes, and prior to this provision they were hit hard by the 2% threshold. Congress allowed them an above-line deduction decades ago, and that survived the TCJA. Pro tip: If you’re a performer with income above $16k, you won’t qualify for this break, but watch for potential changes – there are proposals in Congress to raise that income cap so more artists can benefit.

• 🏛️ Fee-Basis Government Officials: Certain government employees paid on a fee basis can still deduct expenses. A fee-basis official is someone who is compensated in whole or part by fees (think of it like per-service payments) rather than a straight salary. Common examples include some public notaries, justice of the peace, county court magistrates, or state political subdivision employees who keep portions of fees they charge. Because they earn income by fees, the tax law treats them somewhat like self-employed for expense purposes.

  • If you are in this category, you can claim your job-related expenses (perhaps costs of office supplies, travel to meet constituents, etc.) as an adjustment to income. Again, you’ll detail them on Form 2106. Unlike the performing artist, there’s no specific income cap or multiple-employer requirement for fee-basis officials – it’s purely about the nature of how you’re paid. This carve-out exists to equitably allow these officials to deduct expenses required to perform their duties (since often their pay structure assumes they’ll incur such costs).

• ♿ Impairment-Related Work Expenses: Employees who have a disability and incur expenses to be able to work can deduct those costs. Specifically, if you have a physical or mental disability that substantially limits one or more major life activities (e.g. walking, hearing, or performing manual tasks), you can claim impairment-related work expenses. These are expenses that are ordinary and necessary for you to do your job given your impairment.

  • For example, if you’re visually impaired and you pay for an assistant to help read work documents, or if you have a wheelchair and need to modify your workspace for accessibility, those costs count. Such expenses might include specialized equipment, attendant care services at the workplace, sign-language interpreter services, or modifications to your workspace. The tax code allows these to be fully deducted as business expenses (not subject to the 2% floor and not wiped out by TCJA). You would use Form 2106 to report these as well.

  • Notably, impairment-related work expenses were deductible even before 2018 as a miscellaneous itemized deduction without the 2% threshold, but now they’ve effectively been moved to the above-the-line category for allowed employees. This ensures that workers with disabilities aren’t penalized tax-wise for expenses they must incur to have gainful employment.

• 🍎 Educator Expenses (Special Case): While not exactly part of “unreimbursed employee business expenses” category, it’s worth mentioning the educator expense deduction. Teachers and certain school employees from kindergarten through grade 12 can deduct up to $300 per year for out-of-pocket classroom supplies. If both spouses are educators, each can take up to $300 (so possibly $600 on a joint return, but not more than $300 each).

  • This deduction is taken above the line on your 1040 (specifically on Schedule 1) and does not require itemizing. It’s a separate line item and you do not use Form 2106 for it. Importantly, classroom expenses (like books, software, lab supplies) for eligible educators remain deductible even after 2018, unchanged except the limit recently increased from $250 to $300. This is a popular deduction and essentially an exception carved out specifically for educators.

  • We note it here because it’s a type of unreimbursed work expense (teachers paying out of pocket) that is still deductible. However, the $300 cap is strict; any teacher expenses beyond that cannot be claimed as miscellaneous deductions currently. (Before 2018, teachers could both take the $250 above-line and also try to deduct any excess as unreimbursed employee expense on Schedule A, but that latter option is now gone.)

How to claim these exceptions: If you qualify under one of the above categories (reservist, performing artist, fee-basis official, or impairment-related expenses), you will typically file Form 2106 (Employee Business Expenses) with your tax return. On Form 2106, you list your qualifying expenses (travel, equipment, etc.), subtract any reimbursements you got from your employer, and calculate the deductible amount. The result from Form 2106 then flows to your Form 1040.

Specifically, it will appear on Schedule 1 (Additional Income and Adjustments) as an “above-the-line” deduction, often labeled as “Certain business expenses of reservists, performing artists, and fee-basis officials” (all grouped together on one line) – impairment-related expenses also count in that total. By reducing your AGI, these deductions can not only lower your income tax but also potentially benefit you by lowering AGI-dependent items (like student loan interest phaseouts or Medicare premiums). Keep documentation for these expenses just as you would for any deduction; these categories, while allowed, could be scrutinized to ensure only those who truly qualify are using them.

Outside of these groups, unfortunately no other employees can deduct their expenses on federal returns during 2018-2025. For example, a sales rep or software engineer with a regular salary job cannot deduct home office costs, and a nurse can’t deduct uniforms or licensing fees on the federal 1040 anymore.

The tax law has effectively said: if you’re a regular employee incurring costs, either get your employer to reimburse you or you swallow the expense – the IRS won’t help via a deduction. We’ll discuss later how some employers address this through accountable plans and how employees might strategize around it.

Job Expenses Unveiled: Travel, Tools, Uniforms & More 🧰

What exactly counts as “unreimbursed employee expense”? It’s important to know which costs qualify in general (at least in theory) as deductible work expenses for employees, even if at the moment only a few can use them. This also helps in tracking these expenses – for instance, if you’re in an exception category or your state allows deductions, you’ll want detailed records. Here’s a breakdown of common types of job-related expenses and their deductibility:

• ✈️ Travel and Mileage: Work-related travel costs that are not reimbursed by your employer have historically been deductible. This includes transportation, lodging, and meals for business travel away from your tax home.

  • For example, if you had to attend a conference in another state and paid your own airfare, hotel, and meals, those were deductible unreimbursed expenses (pre-2018 or under exceptions now). Also, if your job requires you to drive your personal car for business purposes (not including your commute to the office), you could deduct a standard mileage rate for those miles or actual expenses (gas, maintenance proportionate to business use). Typical deductible travel scenarios: visiting clients, traveling between multiple work sites, temporary assignments out of town, or going to job-related training away from home.

  • Under current federal law, only reservists (100+ miles) or other exception categories can deduct these on Form 2106, but others cannot. Keep in mind, daily commuting from home to your regular workplace has never been deductible – that’s considered personal commuting expense, not business travel. (One common mistake was employees trying to deduct their normal drive to the office – this is not allowed.) But if you travel from your office to a client’s office, or between job sites during the day, those miles are business mileage. If unreimbursed, those would have been deductible in the past and may still be for states or exceptions.

• 👔 Uniforms and Work Clothes: The cost of uniforms or special attire required for your job can be an unreimbursed expense – but there’s a catch. The clothing must be required as a condition of employment and it must not be suitable for everyday wear. Classic examples include a police officer’s uniform, a nurse’s scrubs, a firefighter’s gear, or a theatrical costume.

  • If you must buy your own uniform or protective clothing and your employer doesn’t reimburse you, that expense qualifies. This also includes costs to maintain the uniform, like dry cleaning or tailoring, if those are out-of-pocket. What doesn’t count? Regular clothes, even if you only wear them to work. For instance, a business suit or a pair of black pants that your employer requires as a “dress code” is still considered adaptable to personal use – not deductible. Tax courts have repeatedly upheld this distinction: one famous case disallowed a TV news anchor’s expensive on-air wardrobe because it could be worn off the job, whereas a clown’s costume or a military uniform clearly not for everyday wear is deductible.

  • If you’re in a job that demands specific attire (say, a security guard’s uniform) and you pay for it yourself, that cost was deductible pre-2018 and is still deductible on some state returns or for eligible individuals. Also, safety gear and protective items (hard hats, steel-toe boots, goggles, gloves) are deductible if required for your job and not reimbursed. These are considered necessary for your work. Just remember, everyday clothing that you simply choose to wear at work (even if it’s professional attire) doesn’t qualify – that’s considered a personal expense in the eyes of the IRS.

• 🔧 Tools and Equipment: Many employees in technical, trade, or creative fields purchase their own tools or equipment for work. For example, a mechanic might buy their own set of wrenches and power tools, a graphic designer might purchase special software or a high-powered computer, or a construction worker might have to provide certain power tools on the job. If your employer requires you to have your own tools or doesn’t provide something essential and you go buy it yourself, that cost is a valid unreimbursed business expense.

  • Other examples: a hairstylist buying their own scissors and hair products, a chef purchasing their own knives, or a photographer at a company buying personal lenses. Prior to 2018, these costs could be added up and deducted if you itemized (and beat the 2% threshold). Now, only the special categories of employees can deduct them federally, but many people still incur these expenses. From a financial perspective, if you can’t deduct these anymore, consider negotiating a tool allowance or reimbursement with your employer – otherwise, the cost comes out of your after-tax income.

  • If you do qualify for an exception or are taking a state deduction, keep receipts for any equipment and note the business use. If a tool is also partly personal use, you’d only deduct the work-related portion. For instance, if you buy a laptop that you use 50% for your job (unreimbursed) and 50% for personal, only half the cost would be a work expense.

• 💻 Home Office and Remote Work Expenses: With the rise of remote work, many employees found themselves footing the bill for a home office or extra utility and internet costs. Under current federal law, W-2 employees cannot claim a home office deduction at all (this deduction exists only for self-employed individuals on Schedule C, or for employees prior to 2018).

  • Even before 2018, the home office rules for employees were strict: you had to use the home office exclusively for work and for the convenience of your employer (meaning your employer required you to work from home or didn’t provide you an office space). Now, even if you meet those conditions, there is no federal deduction until at least 2026. So, if you’re an employee who started working from a dedicated home office during the pandemic, things like a new desk, an ergonomic chair, a work PC, higher electricity bills, or upgraded internet service are not deductible on your federal return.

  • This has been a sore point for many remote workers. Some states, as we’ll discuss, offer relief by allowing unreimbursed home office expenses to be deducted on the state return. If your employer has a telework or home office reimbursement policy, that’s the best way to get relief: get them to cover the costs or give you a stipend (ideally under an accountable plan so it’s not taxable income). Office supplies like printer paper, ink, pens, etc., that you buy for working at home also fall into this bucket – deductible pre-2018, not now for most.

  • One strategy: If you have a side gig or small business, you might allocate some expenses like internet or a portion of home costs to that Schedule C (if legitimately used for that business), since as a self-employed person you can still deduct business use of home and utilities. But be careful not to mix up what’s allowable for one role versus your W-2 job.

• 📚 Education and Training: Many employees pursue further education, certifications, or training related to their job. Work-related education expenses (that aren’t reimbursed) have nuanced rules. To be deductible as an unreimbursed job expense, the education must maintain or improve skills needed in your current job or be required by your employer or law for you to keep your salary, status, or job. It cannot be education that qualifies you for a new trade or profession.

  • For example, a CPA taking a course on advanced auditing (to improve current skills) or a nurse attending a medical workshop could deduct those costs. But if that nurse decided to go to law school at night, that wouldn’t be a deductible “work expense” because it trains for a new profession. Deductible education costs include tuition, books, supplies, lab fees, and even travel to and from the classes (and lodging/meals if it’s a short-term training away from home). Exams and licensing fees for certifications needed in your job can also count.

  • Important: If you’re an employee and your employer reimburses you (or pays directly) for education under a qualified plan, you typically can’t deduct it – but you might not need to if it’s employer-paid. There’s also a separate tax benefit called the Lifetime Learning Credit for education, but that’s for personal education expenses and cannot be claimed on the same expenses you’d consider business-related (you generally choose one or the other if eligible). Before 2018, many mid-career professionals deducted things like continuing education seminars or additional college courses related to their field. Now, those only get a federal tax benefit if you’re self-employed or fall in an exception category.

  • If you’re in a state that allows unreimbursed employee deductions, you might still deduct work-related education on the state return. Also note: educator expenses for K-12 teachers we discussed earlier are separate – those are always above-line up to $300 and include professional development courses. Other employees’ education was part of unreimbursed itemized deductions category.

• 📜 Professional Fees and Dues: If you belong to a professional association or union, or you must maintain a license or certification for your job (with fees), those costs are considered unreimbursed employee expenses when you pay out-of-pocket.

  • Examples include union dues for union members, annual membership fees for professional societies (like a bar association fee for an attorney, or a medical board fee for a doctor), state license renewal fees (teaching credential renewal, nursing license renewal), or even things like liability insurance premiums required for your job (malpractice insurance if you’re a W-2 doctor who has to pay your own, though often employers cover that).

  • Prior to 2018, union dues were one of the most common deductions in this category – many unionized workers could deduct their dues and any initiation fees. With the law change, union dues are no longer deductible federally, which effectively made being a union member a bit more costly net of taxes. (Unions have been lobbying to get that deduction restored, arguing it’s unfair that employers can deduct the union bargaining costs but employees can’t deduct dues.) For now, unless you’re in an excepted category, you can’t deduct these on IRS Form 1040.

  • But certain states – notably New York – continue to allow a deduction for union dues on the state tax return. Tax preparation fees and investment advisory fees also used to fall under miscellaneous deductions (2% category), though they are not directly related to one’s W-2 job; those too were eliminated 2018-2025. If you pay any mandatory work fees out-of-pocket, keep track of them in case you can use them for state purposes or for federal if/when rules change.

• 💳 Other Unreimbursed Work Costs: There are various other miscellaneous expenses that employees might incur for their job. For example:

  • Cell Phone Expenses: If you use your personal cell phone for work and your employer doesn’t reimburse a portion, the business use percentage of your plan could be a deductible expense. (E.g., you determine 30% of your usage each month is work-related calls/emails – 30% of your phone bill was deductible pre-2018.) Some states still allow this allocation as a deduction. Ensure you have documentation like phone logs if you ever claim it.

  • Home Internet: Similarly, if you need home internet for your job (say you’re required to have it to connect to work systems from home occasionally) and you pay for it, the work-related portion was deductible. Now, not on federal returns for most, but possibly on state returns.

  • Job Search Expenses: In the past, even the costs of searching for a new job in the same line of work were deductible miscellaneous expenses. This included expenses for resumes, travel to interviews, career counseling, etc. This deduction was also suspended in 2018. So currently, if you spend money trying to land a new position while still in your field, there’s no federal deduction for those efforts. (This is a distinction – if you’re unemployed and looking, it used to be deductible as well, as long as it was a search in the same career. You couldn’t deduct expenses to switch careers.)

  • Moving Expenses: While not an “employee business expense” on Schedule A, it’s related: prior to 2018, you could deduct moving expenses for a job relocation (if certain distance/time tests were met). The TCJA also suspended that deduction for everyone except active-duty military. So if you moved for a new job, that expense is generally not deductible now either. Some states still allow moving expense deductions (Pennsylvania, for example, allows in-state moving expenses). If your employer reimburses your moving costs, under current law they have to include it in your wages (again, except for military moves) – another hit to employees.

  • Miscellaneous Supplies: Think of small things: a waiter buying a corkscrew, a nurse buying a stethoscope, a consultant purchasing reference books for work – any such unreimbursed cost was in theory deductible as an unreimbursed expense. The list can be endless because different jobs have different needs. The guiding principle is: if it’s ordinary and necessary for your job, and not personal, and you paid for it, it qualifies as an unreimbursed employee expense. The challenge now is, outside of special cases or state taxes, you simply can’t claim it federally.

An ordinary and necessary expense for your employment is one that is common in your field and helpful for doing your job. All the categories above fit that in one way or another. The frustration for many is that these legitimate work costs currently go unrelieved by federal tax law for most employees. As an employee, your best bet is to minimize having unreimbursed expenses: ask your employer for reimbursements, stipends, or equipment allowances.

Savvy business owners often set up accountable plans to repay employees for such expenses – which is ideal because reimbursements under an accountable plan are not taxable income to the employee and the employer can still deduct them as a business expense.

This effectively gives the employee the benefit they would have gotten from a deduction (actually even better, a full reimbursement tax-free). If your employer lacks such a program, it might be worth discussing, since the deduction avenue is closed. We will touch on this more in the pros/cons and advice sections.

Filing It Right: IRS Forms & How to Claim the Deduction 📑

Knowing the rules is one thing – but how do you actually deduct unreimbursed employee expenses if you qualify? Let’s map out the process on tax forms for both federal and state scenarios, and clarify which forms are relevant:

• Form 2106 (Employee Business Expenses): This is the primary form used to calculate unreimbursed employee expenses. Prior to 2018, Form 2106 was used by any employee who had job expenses to deduct and either (a) their employer reported reimbursement arrangements on their W-2, or (b) they were claiming vehicle or travel expenses. There was also a simpler Form 2106-EZ for employees with straightforward expenses (no vehicle depreciation, no employer reimbursements), but that was discontinued after 2017.

  • Post-2018, Form 2106 is only required for the specific employees who can still deduct expenses (reservists, artists, fee-basis officials, impairment-related, as well as possibly educators in rare cases if they choose to use it for something extra, but educators generally don’t use 2106). On Form 2106, you’ll detail all your expenses in categories: vehicle, travel, meals, parking, transportation, tools, supplies, etc. You’ll also enter any reimbursements you received from your employer for those expenses (often found on your W-2 in box 12 with code “L” for accountable plan excess or non-accountable plan reimbursements).

  • The form then calculates your deductible expense amount. For those using it now, that amount will carry to Schedule 1 as an “above-the-line” deduction. If you used it pre-2018, the amount carried to Schedule A, line “Unreimbursed employee expenses,” where it then was subject to the 2% floor. Keep in mind, if you are not in one of the qualified categories, the IRS instructions say do not file Form 2106 after 2018 because it won’t do anything. The tax software or IRS would ignore it since the deduction doesn’t apply. So only use it if you know you qualify.

• Schedule A (Itemized Deductions): This is where unreimbursed employee expenses used to be claimed for general employees (pre-2018) and where some states still have you claim them for state purposes. On the federal Schedule A for 2017 and earlier, there was a section for “Job Expenses and Certain Miscellaneous Deductions” where you’d put your total unreimbursed expenses (from Form 2106 if you had to use that to compute them) along with other misc. deductions like tax prep fees, then subtract 2% of AGI to determine the deductible portion. For 2018-2025 federal Schedule A, that entire section is gone – it’s been removed, reflecting that those deductions are not allowed. If you’re curious, the line numbers shifted; for example, in 2017 Schedule A, unreimbursed expenses were line 21.

  • In 2018 onward, Schedule A skips from medical deductions straight to taxes, etc., with no misc. section. Key point: If you are in the exception group (say, a reservist with travel expenses), you do not put those on Schedule A now; they go to Schedule 1 instead via Form 2106. So, typical employees will ignore Schedule A for these (and likely just take standard deduction if they have no other itemizables).

  • You only use Schedule A for things like mortgage interest, state taxes, charity, etc., in these years. For state taxes, some states have their own Schedule A equivalent or worksheet – we’ll cover that next.

• Schedule 1 (Form 1040): This is a form introduced in 2018 to accommodate adjustments to income (among other things). Part II of Schedule 1 is “Adjustments to Income,” i.e., above-the-line deductions. If you qualify for any of the special categories, your deductible unreimbursed expenses will appear on this schedule. Specifically, there’s a line (often line 12 in recent years) for “Certain business expenses of reservists, performing artists, and fee-basis officials.”

  • Impairment-related work expenses for employees would also be included in that amount. You don’t explicitly see “impairment” on the line description, but it’s included by IRS guidance. So, for example, if you’re a reservist with $1,000 of deductible travel, you fill out Form 2106, and then on Schedule 1 you’d write $1,000 on that line.

  • That $1,000 will reduce your total income when computing AGI. Educator expenses have their own separate line (line 10) on Schedule 1 for up to $300, which is distinct. Schedule 1 then flows into the main 1040 form. If you’re using tax software, it usually asks the questions and fills these in accordingly, but it’s good to understand where it goes.

• State Forms and Schedules: State income tax returns often start with your federal AGI and then have additions or subtractions to income for differences in state law. The states that allow unreimbursed employee expense deductions will have some mechanism for it.

  • For example, Pennsylvania uses a special form PA Schedule UE (Unreimbursed Employee Expenses) to detail each category of expense (travel, tools, etc.) and subtract them from your wage income on the state return. New York has a form IT-196 (which is basically Schedule A for NY) where line 21 allows unreimbursed employee expenses, calculated via a worksheet, even if not on federal. California uses the federal Form 2106 as part of its return if you itemize for CA; California’s Schedule CA is where differences are reconciled, and it allows miscellaneous deductions like unreimbursed expenses.

  • Each state that permits these will either accept a copy of Form 2106 or have their own worksheet to compute the allowable amount, and then that amount either is an itemized deduction on the state Schedule A equivalent or a direct adjustment. We’ll summarize the state-by-state differences in the next section’s table. The key for employees: if your state allows it, be sure to take advantage on your state return, because that can still save you some money even if your federal return gives nothing.

• Other Relevant Forms: A couple of other forms sometimes come into play with employee expenses:

  • Form W-2: This is not a form you fill out, but the one you receive. It’s worth noting that if you had any reimbursements from your employer under a non-accountable plan, those amounts would be included in your W-2 wages (Box 1) and listed separately in Box 12 with code L. Before 2018, you could offset those by deducting the expenses on 2106. Now, you generally want to avoid non-accountable plan reimbursements since you can’t deduct the related expenses. If your W-2 shows code L amounts, that means you had reimbursements that were taxed to you; unfortunately, currently you can’t deduct the expenses that gave rise to those, unless you qualify under exceptions.

  • Form 1040 Schedule C (Business Profit/Loss): If you have self-employment income (side gig or full-time freelancer), that’s separate from being an employee. You would deduct business expenses on Schedule C, not on Form 2106. Sometimes someone might have both a W-2 job and a side 1099 gig; you have to be careful to separate those expenses. Expenses related to your W-2 job are not allowed (generally), but expenses for your independent contractor work are allowed on Schedule C. So if a remote employee also consults on the side, the home office might be partially allocated to the Schedule C if it qualifies for that. Just don’t try to sneak W-2 related costs onto Schedule C; that could be considered improper. The IRS is aware of that potential workaround, and you must genuinely have a separate trade or business to use Schedule C.

  • Form 3903 (Moving Expenses): If you’re active-duty military who moved due to orders, you can deduct moving expenses on this form. It’s one of the few deductions still around for job-related moving costs, but only for military. We mention it because people often lump “moving for a job” into job expenses – but it’s handled distinctly. Civilians cannot use Form 3903 until (maybe) after 2025 if that deduction returns.

Step-by-step (federal) if you qualify for a deduction today:

1. Gather your expense records. Keep a log of mileage, receipts for travel, credit card statements for supplies, etc. Ensure none of it was reimbursed by your employer (or if partially reimbursed, note how much).

2. Fill out Form 2106. Input vehicle information if claiming mileage, enter travel, meals, lodging in the appropriate lines, and other expenses like equipment, dues, etc. Enter any reimbursements received (which reduce what you can deduct). The form will separate out any disallowed meal portion (only 50% of meals are allowed) and apply the relevant limits.

3. Transfer to Schedule 1. Take the allowable expense amount (for reservist/artist/etc.) from Form 2106, and put it on Schedule 1, line 12 (or the appropriate line for that year’s form). If you’re an educator with classroom expenses, put that on line 10 (separate from Form 2106, up to $300).

4. File with your Form 1040. The Schedule 1 adjustments will flow to your 1040 (line 10 of 1040 for the total adjustments, which then subtracts from gross income). Your taxable income is thereby lowered.

5. State return: If you’re in a state that allows these expenses, you will either fill out a state version of Schedule A or a special form. For example, complete NY’s worksheet or PA’s Schedule UE with the details. Often, you can attach a copy of Form 2106 to your state return to substantiate the numbers. The state will either use it as an itemized deduction or a direct subtraction from income.

6. Documentation: Keep all support for at least 3-6 years (federal statute of limitations is generally 3 years, but can extend; states can vary). If you deducted a large amount, it could potentially draw scrutiny. For instance, if you’re a reservist deducting $10,000 of travel, you want mileage logs, hotel bills, etc., in case of questions.

Many tax preparation software programs handle these seamlessly: they’ll ask “Did you have any of the following: reservist expenses, performing artist expenses, etc.?” If you say yes, they’ll prompt the details and fill out Form 2106 for you. If you say no, they won’t even generate a 2106. If you try to force one in without saying you qualify, the software might warn you that it won’t count (because of TCJA). So pay attention to those prompts.

A word about itemizing vs standard: Since unreimbursed employee expenses (except above-line ones) are off the table federally, this consideration mostly matters for state taxes now. Some states require you to itemize at state if you itemize federally, but states like California and New York explicitly allow you to itemize on the state return even if you took the standard deduction federally.

That means you could take the bigger standard deduction on your federal 1040, and still itemize things like employee expenses on your state return to get a state benefit. This is great because it’s not an all-or-nothing choice. We’ll illustrate this in the state differences next.

State Tax Breaks: Where Can You Still Deduct Employee Expenses? 🏢

Federal law might have shut the door on unreimbursed employee deductions for now, but several states have their own rules. Some states “decouple” from the federal changes, meaning they still allow you to claim these expenses on your state tax return. This can provide at least a partial tax relief for employees with significant out-of-pocket costs. It’s crucial to check your state’s stance, because the difference can be hundreds of dollars in state tax saved. Below is a summary of how select states handle unreimbursed employee expenses versus the federal rules:

As the table shows, seven states (AL, AR, CA, HI, MD, MN, NY) plus PA in its own way, offer relief for unreimbursed employee expenses. The degree and method vary. If you live in or work in those states, absolutely take the time to claim the deduction on your state return – it’s one of those opportunities people miss because they assume “if federal doesn’t allow it, state won’t either,” which is not always true.

For example, a New York employee might save several hundred dollars in NY state tax by deducting union dues and tool expenses on IT-196. California’s high-income workers who spend a lot on work tools or travel can still get a break on their CA return. And Pennsylvania’s deduction can save its flat income tax (3.07%) on a chunk of income – not huge, but every bit counts, especially on large expenses.

Planning note: If you work in a state that allows the deduction but live in a different state, be mindful of how that works. Some states only allow it for residents, while others allow non-residents to claim it against income earned there. For instance, if you live in NJ (no deduction) but work in NY (deduction allowed), you can deduct your unreimbursed expenses on your NY non-resident return (Form IT-203) which will reduce NY taxable income.

NJ, however, doesn’t tax your NY wages again (they give a credit for NY tax instead), so effectively you still benefit via lower NY tax. Reciprocal agreements or credit systems can complicate things, but generally, the deduction will help at least in the state where you work or reside if either offers it.

The patchwork of state rules is a reminder: always check your specific state’s tax guidance. For the states listed, the tax forms or instructions will have sections on employee business expenses. Many tax software programs will handle it if you indicate you have these expenses for state purposes (they often ask separately for state-only adjustments). Don’t assume it’s not allowed just because the federal return ignores it.

Real-Life Scenarios: Deduct or Not Deduct? 📊

To bring all this information down to earth, let’s walk through a few example scenarios. These will illustrate how the rules apply in practice for different individuals. Each scenario highlights a common situation and shows whether an unreimbursed expense deduction is available at federal and state levels, and how one might handle it.

Scenario 1: Pre-TCJA vs Post-TCJA – Salesperson Travel
Meet Alice, a sales representative:

Scenario 2: Qualified Performing Artist – Multiple Gigs
Consider Brian, an aspiring actor and qualified performing artist:

Scenario 3: Remote Employee in a Non-Conforming State
Now, Chloe, a graphic designer forced to work from home:

Scenario 4: Armed Forces Reservist (Bonus example)
Let’s illustrate a military reserve situation with Daniel:

These scenarios highlight the stark contrast between who can deduct and who cannot. It underscores why it’s important to know the rules for your specific situation. If you identified with Alice or Chloe (typical employees), you saw that you’re generally out of luck on the federal return now. If you’re like Brian or Daniel (performer or reservist), you have a path to deduct but need to meet criteria and fill out the right forms. And state residency can change outcomes too, as we saw with Chloe in California.

✅ Pros & ❌ Cons: Weighing the Deduction of Work Expenses

If you do have the option or are strategizing about unreimbursed employee expenses, consider the pros and cons. Should you go out of your way to claim these or change arrangements? Here’s a balanced look:

In essence, the pros of deducting unreimbursed expenses primarily apply if you are eligible to do so (special category or state-level). For those folks, it’s a valuable way to not lose out entirely on work-related spending. For everyone else, the cons underscore that it’s often a lost cause federally, and energy might be better spent finding alternatives (like employer reimbursements or adjusting tax status in some cases). Even when deductions were common, they had limitations (like the 2% rule) and complexity. Now, with current law, one might argue the landscape is simpler – if you’re a regular employee, you generally know you can’t deduct, period, which simplifies filing (albeit at the cost of paying higher taxes than before).

🚫 Avoid These Common Mistakes When Dealing with Work Expenses

When navigating unreimbursed employee expenses, there are pitfalls that taxpayers should steer clear of. Here are some common mistakes and misconceptions – make sure you avoid these to stay compliant and optimize your situation:

• Assuming You Can Deduct (When You Can’t): Don’t automatically assume you can write off your work expenses on your tax return. A lot of people still make purchases (a new laptop for remote work, home office furniture, etc.) thinking, “I’ll just deduct this.” Under current federal law, that’s false for most employees. Unless you know you qualify under an exception, do not attempt to claim unreimbursed job costs on your 1040.

  • You’ll end up frustrated when your tax software disallows it or, worse, an IRS audit later removes it. Always check the latest rules – tax law changes have caught many by surprise (for example, folks who deducted expenses in 2017 and tried the same in 2018 got an unpleasant surprise).

• Trying to Deduct Commuting Costs: Remember that your daily commute to and from your regular workplace is never deductible as a business expense. This was true even before 2018. A mistake some make is attempting to count gas, car wear-and-tear, or train tickets for their normal commute as a work expense. The IRS considers commuting a personal expense. You cannot deduct your drive to the office, no matter how far or how early you have to go.

  • Deductible vehicle mileage is only for business trips (e.g., going to a client site, or between job locations during the day). If you put commuting miles on Form 2106 or anywhere else, that’s incorrect and will be disallowed. One minor exception historically: if you had a temporary work location far from your regular work, some commuting might qualify, but that’s nuanced. As a rule: your home-to-office travel is off-limits.

• Double Dipping on Educator Expenses: Educators, take note – you get that above-the-line $300 deduction for classroom expenses. Do not also try to include those same expenses as unreimbursed job expenses elsewhere. Before 2018, teachers sometimes deducted additional expenses above $250 as unreimbursed misc.

  • Now, since misc. are gone, what some might accidentally do is take the $300 and also mistakenly list some of the same on a state return or something. For states that allow unreimbursed deductions, the state typically requires you to exclude whatever you already took on the federal educator line. For example, if a teacher spent $500 on supplies, they take $300 on federal.

  • On a state like NY, they could only potentially deduct the remaining $200 as unreimbursed, not the full $500. Be careful not to deduct the full amount twice. It’s an easy error if you’re not following the coordination rules, especially when using tax software – ensure you answer questions correctly so you don’t accidentally double benefit.

• Not Keeping Receipts/Logs for Allowed Expenses: For those who do qualify to deduct expenses (or who are claiming them on a state return), inadequate documentation is a big mistake. If you deduct mileage, you should have a mileage log or at least a calendar showing those business trips, with odometer readings or distance calculations. If you deduct meals or travel, keep the receipts and note the business purpose on them (e.g., “Dinner with client after meeting on 3/5”). For tools, keep invoices.

  • The IRS or state tax authority can ask for proof that these expenses were real and related to work. If you can’t substantiate them, they can deny the deduction and possibly impose penalties. Also, if you’re a performing artist or fee-basis official using the above-line deduction, you might have to prove you meet the criteria (like proof of multiple employers or fee-based pay structure). Good records make audits far less stressful and show that you’re following the rules diligently.

• Misclassifying Personal Expenses as Business: Be honest with what counts as a work expense. Buying a new suit for work might feel job-related, but as discussed, unless it’s a required uniform, it’s not deductible. Similarly, expenses that are partly personal should be split (only the business portion is deductible).

  • A common error would be deducting the full cost of your internet or cell phone when only, say, 30% of it is used for work. If you claim 100% of your home internet as an employee business expense but you obviously also stream movies and browse Facebook on it, that’s not accurate. Only the prorated work portion is allowed. Overstating business use can be flagged by auditors (they expect to see reasonable allocations).

  • Another example: claiming a home office deduction when your “home office” is actually your kitchen table where the family also eats – that fails the exclusive use test (for those few who can even claim a home office as an employee, like a fee-basis official or if you’re doing it on state). Keep the delineation clear to avoid having your deduction thrown out for being a personal expense in disguise.

• Forgetting About State Deductions: Some people leave money on the table by not realizing their state allows a deduction. If you live in a state we outlined (or moved mid-year), don’t neglect to claim unreimbursed expenses on your state tax return. For instance, you might know you can’t deduct on federal, so you ignore the expenses entirely.

  • But then you might miss entering them for, say, New York or Pennsylvania. This is especially common for folks using tax software that isn’t clear about state-specific inputs. Always review your state return instructions: if there’s a line for employee business expenses, make sure you populate it if you had any. This could save you a decent chunk of change in state taxes.

• Not Utilizing Accountable Plans (Employers): If you are a small business owner or have influence at your company, not using an accountable plan for expense reimbursements is a mistake. An accountable plan is an IRS-sanctioned way to reimburse employees for business expenses without treating the reimbursement as taxable income.

  • The employee provides documentation (receipts, mileage logs) to the employer, the employer reimburses the exact amount, and it’s not included on the W-2. The benefit: the employee is made whole tax-free, and the employer can still deduct the expense as a business cost. Post-TCJA, this is the only way for many employees to get relief. If a company simply gives a flat stipend and doesn’t require receipts (a non-accountable plan), that money goes on the W-2 as income and the employee can’t deduct the expenses – bad outcome.

  • Employers should set up accountable plans for things like travel, home office, or tools. Employees should encourage their companies to do this if it’s not already in place, especially if employees are incurring significant costs. It’s a win-win: the company doesn’t pay extra tax-deductible than a salary, and the employee isn’t taxed on it. Not taking advantage of this is leaving a valuable strategy unused. (While this is more an employer-side mistake, employees can be proactive in raising the issue.)

• Amending Wrong Years: A nuance: some folks, upon learning all this, might realize “Oh, I had unreimbursed expenses in 2017 or earlier that I never deducted. Can I go back and claim them?” Possibly, yes – you can amend prior year returns (within the statute, typically 3 years from filing date, so 2019 might still amend 2018, etc.).

  • However, doing so for 2018-2021 thinking you can now claim those will be fruitless, because the law was already in effect. Only pre-2018 years had that deduction. So don’t file an amendment for 2018 hoping to add unreimbursed expenses – the deduction wasn’t allowed that year. We mention this because some people misunderstood and thought TCJA started 2019 and tried to deduct in 2018 or vice versa. The correct cutoff: 2017 was the last year for most employees to deduct.

  • So at this point (in 2025), the only amendable year that might yield something is 2019 (if filed in 2020, you have until 2023 to amend) or 2020 if extended, but since 2018 onward it’s disallowed, there’s nothing to amend for those except for the special categories (which you hopefully claimed initially if you qualified).

Avoiding these mistakes will save you from headaches, denied deductions, or even audits. When in doubt, consult the IRS publications (Pub 529 is a good one on this topic) or a tax professional, especially if you think you might qualify for an exception or have unusual circumstances. The rules can get intricate, and a misstep can cost you money or invite scrutiny.

Key Definitions and Concepts 📖

To wrap up our deep dive, let’s clarify some key tax terms and concepts related to unreimbursed employee expenses. Understanding these will help ensure you know exactly what we’re talking about and can communicate clearly with tax preparers or when doing further research:

• Unreimbursed Employee Expense: Any work-related expense that a W-2 employee pays out-of-pocket and is not paid back (reimbursed) by the employer. These include costs like travel, supplies, uniforms, union dues, etc., that you incur to perform your job. “Unreimbursed” simply means your employer didn’t give you money for it. If they did reimburse you, then it’s not unreimbursed (and generally not deductible because you weren’t out funds).

• Miscellaneous Itemized Deduction: A category of deductions on Schedule A that in the past included unreimbursed employee expenses, tax prep fees, investment expenses, and other smaller write-offs. These were subject to the 2% of AGI floor, meaning you only got to deduct the portion of their sum that exceeded 2% of your adjusted gross income. The TCJA suspended all miscellaneous itemized deductions from 2018 through 2025. Unreimbursed employee expenses were one of the largest components of this category.

• Tax Cuts and Jobs Act (TCJA) of 2017: A major federal tax reform law effective for tax years 2018-2025 that, among many changes, eliminated the deduction for unreimbursed employee expenses for most people. It roughly doubled the standard deduction, lowered tax rates, and eliminated personal exemptions. It also suspended miscellaneous itemized deductions. The TCJA’s changes to unreimbursed expenses mean only a few exceptions (listed in the law) can still deduct them. Many provisions of TCJA expire after 2025, potentially reverting rules to pre-2018 status if not extended.

• Adjusted Gross Income (AGI): Your gross income (wages, interest, etc.) minus certain above-the-line deductions (adjustments) but before standard or itemized deductions. AGI is an important number because many tax benefits are limited or phased out based on AGI. The 2% rule for misc. deductions was based on AGI. When we say “above-the-line deduction,” it means a deduction that reduces your AGI (on Schedule 1). Unreimbursed expenses for exceptions are above-the-line, which is advantageous. AGI appears on line 11 of Form 1040 and is often called “the bottom of page 1” in old terms.

• Above-the-Line vs. Below-the-Line: Above-the-line deductions are those that come before the line where AGI is calculated (the “line” being AGI on the tax form). These deductions (also known as adjustments to income) reduce your gross income to yield AGI. They can be taken whether or not you itemize. Examples: IRA contributions, student loan interest, and in our context, qualified unreimbursed expenses for reservists/artists, etc. Below-the-line deductions are taken after AGI, such as the standard deduction or itemized deductions like mortgage interest. Unreimbursed employee expenses (for non-exceptions) used to be below-the-line (as part of itemized deductions on Schedule A). Above-line is generally more beneficial and accessible.

• Form 2106 (Employee Business Expenses): An IRS form used by employees to calculate and report their unreimbursed work expenses. The form helps to itemize various expenses (vehicle, travel, meals, etc.) and subtract any reimbursements received. Post-calculation, it provides a number that either goes to Schedule A (if we’re talking pre-2018 or state) or Schedule 1 (for current allowed adjustments). After 2017, only certain qualified employees are supposed to use this form (others cannot benefit from it). If you see Form 2106 in your tax packet, it means you or your preparer likely thought you have deductible expenses as an employee.

• Schedule A (Itemized Deductions): The schedule on the federal tax return where you list deductions such as mortgage interest, property taxes, medical expenses, and prior to 2018, miscellaneous deductions like unreimbursed employee expenses. You use Schedule A if you are not taking the standard deduction and your total itemized deductions are higher. It’s divided into sections: medical (with a 7.5% AGI threshold), taxes, interest, charity, casualty losses, and previously, misc. deductions with 2% threshold. Post-2018, the misc. section is removed due to TCJA. Schedule A is still used for other deductions. Some states have their own version of Schedule A (like NY’s IT-196 or CA’s Schedule CA) to allow state-specific itemized items.

• Schedule 1 (Form 1040): A supplemental schedule on the federal 1040 that reports additional income and adjustments to income. Part II of Schedule 1 is where you find adjustments (above-the-line deductions). For instance, the educator expense deduction and the reservist/performing artist expenses show up here. This schedule was introduced in 2018 to declutter the main Form 1040, moving many lines off the main form. If you have adjustments like HSA contributions, moving expenses (for military), or our discussed employee expenses exceptions, they’re listed on Schedule 1.

• Qualified Performing Artist: A special designation for a performing arts professional who meets IRS criteria (multiple employers, each paying $200+, expenses over 10% of income, and low AGI <= $16k). A qualified performing artist can deduct performing-arts-related job expenses as an above-the-line deduction. This term is defined in the tax code (and we outlined the details earlier). It’s an all-or-nothing definition; if you miss one of the criteria, you’re not “qualified” for that tax year. For example, if your AGI was $17,000, you’re out of luck (even if everything else fits). This exists to help actors, musicians, and entertainers who often spend a lot on their craft while earning little in the early stages of their career.

• Fee-Basis State or Local Government Official: An employee of a state or local government who is paid in whole or part on a fee basis, meaning they keep certain fees as compensation. This term covers positions like certain public registrars, notaries, judges paid by fees per case, etc. The key is the pay structure, not the title. These officials can deduct their job expenses above-the-line. The rationale is that their “fee” income might not account for expenses they must cover (like maintaining an office to carry out their duties). “Fee-basis” is a bit antiquated concept but still applies in some small-town or specialized roles.

• Impairment-Related Work Expenses: Expenses necessary for a disabled individual to work, which can include attendant care or special equipment, that are not reimbursed. They enable the person to perform their job despite physical or mental limitations. These have a unique status: even when they were a miscellaneous deduction, they weren’t subject to the 2% floor (and now they are an allowed deduction for those who qualify). If you see this term, it usually refers to out-of-pocket costs like a sign-language interpreter for a deaf employee during meetings, or a specialized wheelchair-accessible desk for an employee in a wheelchair (if the employer didn’t provide it). They are a compassionate exception in the tax rules.

• Accountable Plan: An employer’s reimbursement arrangement that meets IRS rules so that reimbursements are not taxable income to the employee. Under an accountable plan, the employee must substantiate expenses (with receipts, etc.) and return any excess advance not spent. If those conditions are met, the reimbursements do not appear on the employee’s W-2 as wages. This is the preferred way to handle employee business expenses. In contrast, a non-accountable plan would mean the employer just gives, say, a $200 monthly stipend without requiring proof of expenditure – that $200 would be added to wages (taxable) and, since 2018, the employee can’t deduct the expenses that $200 was supposed to cover. In short, accountable plans make it as if the employee never had out-of-pocket expenses (tax-wise). Companies often have expense report systems that qualify as accountable plans.

• Standard Deduction vs. Itemized Deductions: The standard deduction is a fixed dollar amount that taxpayers can subtract from income if they do not itemize. Itemized deductions are the sum of eligible expenses (listed on Schedule A) that can be subtracted instead. You choose whichever is higher (or more advantageous). For 2025, the standard deduction for a single filer is around $13,850 (and double for joint, etc., with inflation adjustments yearly). Before 2018, more people itemized because the standard was lower and there were more itemizable categories (like unreimbursed expenses). After TCJA, about 90% of taxpayers take the standard deduction because it’s larger and some itemizable categories were limited or removed. Unreimbursed employee expenses are itemized deductions (when allowed at all) – so if you’re taking the standard, they wouldn’t have helped you anyway on federal. On state returns, the concept can differ; some states have no standard deduction or require following federal choice.

• Above-the-Line Deduction for Reservists (100-Mile Rule): This refers to the special adjustment to income allowed for reservists who travel more than 100 miles from home for reserve duties. It’s sometimes called the “reserve travel deduction.” It’s an above-the-line deduction on Schedule 1. The key term is “100 miles”: you must exceed that distance for the drill or training. This deduction was preserved by TCJA. If you hear “100-mile rule,” that’s what it’s about: it’s essentially a threshold to qualify for that deduction.

• Internal Revenue Code (IRC) Section 67(g): The section of the tax code enacted by TCJA that disallows miscellaneous itemized deductions from 2018 through 2025. If you ever read tax literature or court cases, they might reference Section 67(g) as the provision that says, effectively, “no deduction is allowed for any miscellaneous itemized deduction for taxable years 2018-2025.” This is the technical backbone of why you can’t deduct unreimbursed expenses now. It overrode Section 67(a) which had the 2% rule. While you don’t need to know the code number to do your taxes, it’s useful in understanding that this was a deliberate legislative temporary cut.

Having these definitions in mind, you’ll be better equipped to understand discussions or IRS instructions on the topic. Tax terminology can be arcane, but we’ve broken down the ones most relevant to deducting employee expenses. If you encounter other unfamiliar terms, always consult a reliable source or glossary – taxes are full of jargon that can be decoded with a bit of effort.

FAQs 🤔: Quick Answers to Common Questions

Finally, let’s address some frequently asked questions about unreimbursed employee expenses. These are real-world questions often posed by taxpayers on forums and to tax professionals. We’ll keep the answers brief and to the point – yes or no as appropriate, followed by a short explanation (under 35 words each).

Q: Can I deduct my unreimbursed work expenses on my federal taxes for 2023?
A: No. For 2018-2025, the IRS doesn’t allow W-2 employees to deduct unreimbursed job expenses on federal returns, unless you meet a specific exception category (e.g., reservist, performing artist).

Q: I’m a remote W-2 employee – can I claim a home office deduction?
A: No. W-2 employees cannot claim the home office deduction under current law. That deduction is only available to self-employed individuals or if you meet a narrow exception (fee-basis official).

Q: Do any states let you deduct unreimbursed employee expenses?
A: Yes. A number of states (such as CA, NY, PA, AL, AR, HI, MD, MN) still allow unreimbursed employee expense deductions on state returns, even though federal law disallows them.

Q: I’m a teacher. Can I deduct classroom supplies beyond the $300 limit?
A: No. Not on your federal return. You’re capped at $300 (or $600 MFJ for two educators). Any additional out-of-pocket teaching expenses are not deductible federally, though some states might allow them.

Q: My employer gave me a fixed monthly expense stipend which was taxed. Can I deduct my expenses?
A: No. If that stipend was treated as taxable income (non-accountable plan), you cannot deduct the related expenses on federal taxes now. It’s better for your employer to reimburse under an accountable plan.

Q: I have two jobs. Can I deduct expenses from one job against income from the other?
A: No. Unreimbursed expenses from a W-2 job can’t be deducted against any W-2 income currently. Each job’s expenses would have been separate misc. deductions (now suspended) unless one is self-employed.

Q: Are union dues tax deductible for employees?
A: No. Not on federal returns at this time. Union dues were unreimbursed employee expenses and were eliminated as a deduction in 2018. Some states like New York still allow a deduction for dues.

Q: Will unreimbursed job expenses become deductible again after 2025?
A: Yes. Under current law, the suspension ends in 2026, meaning miscellaneous itemized deductions (including unreimbursed expenses) would be allowed again. However, Congress could change this and extend the disallowance.

Q: I’m an independent contractor (1099). Can I deduct my business expenses?
A: Yes. If you’re truly self-employed (1099 income reported on Schedule C), you can deduct ordinary and necessary business expenses on Schedule C. The 2018 law changes did not affect Schedule C deductions.

Q: Should I keep my work expense receipts even if I can’t deduct them now?
A: Yes. It’s wise to keep them. You might need them for state tax deductions or if the federal law changes (or if you later qualify for an exception or have to prove expenses for reimbursement).

Q: I’m a National Guard member driving 150 miles to drills. Can I deduct that mileage?
A: Yes. As a reservist traveling over 100 miles for duty, you can deduct eligible travel expenses (mileage, lodging, 50% of meals) above-the-line on your federal return using Form 2106.

Q: If I wasn’t reimbursed for a work expense, is there any way to benefit tax-wise?
A: Yes (indirectly). You could ask your employer to reimburse you under an accountable plan. That way you get your money back tax-free. Otherwise, seek state deductions if available.

Q: I paid for a professional certification required for my job. Deductible?
A: No (federal). Work-related education and certification fees are not deductible for W-2 employees under current federal law. If it’s required for your job, consider asking your employer to cover it.

Q: Does the IRS audit unreimbursed expense deductions often?
A: Yes. Historically, large unreimbursed employee expenses were an audit flag. Currently, only special cases can deduct them, and those claims (like Form 2106 entries) may be scrutinized for eligibility.

Q: I got a W-2 and a 1099 for side gigs. Can I deduct expenses somewhere?
A: Yes. Expenses related to your 1099 income go on Schedule C (deductible). Expenses from your W-2 job are not deductible (unless you qualify for an exception or state deduction for those).