Business expenses are best deducted in the business. Sometimes business expenses are paid for by an individual, and then reimbursed by the business. Occasionally, however, the expense is not reimbursed by the business, and an individual reports the unreimbursed business expense as a deduction on Schedule A.
This type of deduction has been considered an audit red flag in the past. However, thanks to the new tax law, this red flag is going away. You’ll want to make sure you are reimbursed for any business expenses, since starting with 2018 these deductions are eliminated for individuals. If you have some unreimbursed business expenses for 2017, get it reported to take your last tax deduction. But moving forward, make sure you get reimbursed by the business.
When reporting unreimbursed business expenses, you should report the total “ordinary and necessary” job expenses paid for which you weren’t reimbursed. The IRS says an ordinary expense is one that is common and accepted in the field of trade, business, or profession, and that a necessary expense is one that is helpful and appropriate for the business (pointing out that an expense does not have to be required to be considered necessary).
If you claim any travel, transportation, meal, or entertainment expenses for your job then Form 2106 is required in addition to Schedule A. This includes mileage expenses for the business use of your personal vehicle.
The IRS also gives these examples of potential unreimbursed employee expenses.
Don’t forget – 2017 is the last year an individual can take these deductions. Get reimbursed by your employer for any 2018 expenses.
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