Tax Deductions: How to Report
How To Report
In order to claim miscellaneous deductions correctly you must properly itemize deductions on Schedule A (Form 1040 or Form 1040NR. This will involve the following:
- Reporting any miscellaneous deductions subject to the 2% limit on lines 20 through 22 and the total on line 23 for Form 1040, or lines 9 through 11 and the total on line 12 for Form 1040NR.
- Reporting any miscellaneous deductions not subject to the 2% limit on line 27 for Form 1040, or line 16 for Form 1040NR.
For more information see Instructions for Schedule A in your Form 1040 or the instruction booklet in Form 1040NR.
Form 2106 and Form 2106-EZ. Keeping track of employee business expenses can be a complicated process, however you must file either Form 2106 or Form 2106-EZ if you have any employee business expenses that are deductible.
Listed below are a number of criteria that if applicable to you, must be filed under Form 2106 or Form 2106-EZ.
- You are a qualified performing artist claiming performing-artist-related expenses. (See Performing Artist section under Deductions Not Subject to the 2% Limit.)
- You are a fee-basis state or local government official claiming expenses related to performing your job. (See Officials Paid on a Fee Basis section under Deductions Not Subject to the 2% Limit.)
- You are physically or mentally disabled and are claiming impairment-related work expenses. (See Impairment-Related Work Expenses section under Deductions Not Subject to the 2% Limit.)
- You are a of the Armed Forces reserves and incurred travel expenses that are deductible as an adjustment to gross income. (See Armed Forces Reservists Traveling More Than 100 Miles From Home section.)
- You are claiming job-related vehicle, travel, transportation, meal, or entertainment expenses. This does not apply if either of the following is true.
- None of your expenses are deductible because of the 2% limit on miscellaneous itemized deductions.
- Your only entry on Form 2106 or Form 2106-EZ is on line 4. If this is true and (a) above is not true, enter the expenses directly on Schedule A (Form 1040), line 20, or Schedule A (Form 1040NR), line 9
Who can use Form 2106-EZ.You may use the shorter Form 2106-EZ instead of Form 2106 if the following criteria are applicable to your current situation.
- You are not reimbursed by your employer for any expenses. (Amounts your employer included as wages on your Form W-2, box 1, are not considered reimbursements.)
- Either:
- You are not claiming vehicle expense, or
- You are using the standard mileage rate for your vehicle.
Statutory employee. If you are a statutory employee, you may deduct business expenses related to your statutory employment status on Schedule C or C-EZ (Form 1040).
Description of a statutory employee is included in one of the following four situations.
- You are a driver who is either a commission-based employee or an agent for another entity, and:
- Distribute meat, vegetable, fruit, or bakery products,
- Distribute beverages (other than milk), or
- Pick up and deliver laundry or dry cleaning.
- You are a full-time life insurance sales agent for a life insurance company whose principal business activity is selling life insurance and/or annuity contracts.
- You are a home-based worker, working on materials or goods supplied by someone else. The supplier must provide guidelines for the work you do, and you must return the work to that particular supplier or another supplier named by the original supplier.
- You are a full-time traveling or city salesperson who works only for one firm or person (except for sideline sales activities). You turn in orders from customers who are wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer's business operation. This work must be your principal business activity.
If you are a statutory employee, you will receive a Form W-2 from your employer with "Statutory employee" checked in box 13.
