What Are Employee Business Expenses?
by T.R. Miller
Many employers reimburse workers for some expenses incurred for work-related duties. Oftentimes, employees can claim the non-reimbursed expenses as deductions from their annual taxes. Depending on how much your own money you have spent doing your job, employee business expenses could get you a significant reduction in annual taxes or even a refund.
You may be able to claim expenses incurred for work-related duties on your taxes.
The most common business expense is the cost of using your own vehicle for work. You cannot claim the cost of commuting to work on your tax returns, but you can claim the cost of traveling from your office to other work-related locations. For example, if your job requires you meet with clients outside the office, you can claim the cost of driving your car to those meetings.
If you only use your car for business purposes, you may be able to claim the entire annual expense of driving that car. If your employer already reimburses you for using your car for work, you may not claim it on your tax return.
You may be able to deduct the cost of entertaining and gift giving related to your work, but there are restrictions. Only 50 percent of meals and entertainment expenses may be deducted. If your employer reimburses you for work-related entertainment or gift giving, or if you are given an allowance for such purposes, you may not claim those expenses on your tax return. The exception would be if your employer does not fully cover the cost of entertaining and gift giving required for work.
Home Office Expenses
If you are self-employed or telecommute for an employer, you may be able to claim some of those expenses when you file taxes. To claim home office expenses, you must use part of your home as the primary place for your business, or it must be the location where you meet clients. You can also claim home office deductions if you use a separate structure not attached to your home for business. If you use the home office location for personal use at all, you may not claim it as a home office expense when you file taxes. Exceptions are made if you use your home for child care services or to store items for your business.
If you qualify, you may deduct the portion of your home used for work from the total cost of your home. For example, if you live in a 1,200-square-foot home and 300 square feet are used for work, you may deduct 25 percent of your mortgage, rent, insurance, repairs, maintenance and taxes from your taxes.
Your employee business expenses must exceed at least 2 percent of your adjusted gross income to make any difference in your taxes, according to Bankrate.com. In addition to home office expenses, mileage and business entertainment expense, you may be able to claim part of your cell phone bill, tuition for employment-related classes, doctor's visits required by an employer, subscriptions to trade magazines, dues to professional organizations and even the cost of getting a passport for a business trip.
Lawyers.com advises that employees keep detailed records to substantiate any deductions made for employee business deductions, including copies of bills and receipts.