Certain expenses that are incurred during a taxpayer’s work hours may be eligible for federal tax deductions if the itemized deduction process is chosen by the taxpayer. Expenses are a normal part of having a job, including gasoline burned from driving from home to work, maintenance performed on a car to keep it running, buying proper attire to wear to work, and expenses incurred for education to allow a person to be qualified for a certain job.
Through all of these expenses, there are only a select few expenses which qualify for federal tax deduction. As a general rule of thumb, if an expense is required for job related practices, it usually is categorized as a federal tax deduction, though gray areas within the tax return process may create confusion.
Mileage is an expense that is usually misunderstood as a federal tax deduction by many taxpayers. Mileage that is incurred from driving a personal vehicle to and from work is not included in federal tax deductions. If a job requires a person to drive from one place to another, however, it may be tax deductible. This usually includes tasks required from a job to run certain errands, attend meetings in other locations, or perform general tasks requiring the use of one’s personal vehicle. Each mile used for these specific tasks are tax deductible, so it is important for an individual to keep a written account of the number of miles used for work-related duties, as well as any receipts that prove the use of the miles for a job.
If a taxpayer is required to use a cell phone for job-related tasks, the cell phone expenses are tax deductible, given that the employer does not reimburse the taxpayer for cell phone usage. In addition, federal rules maintain that a separate business cell phone is required to receive federal tax deductions for work-related cell phone use. A personal phone will not qualify, even if it is also used for work.
Rent and Mortgage:
An individual that works from home is eligible to write off a portion of a rent or mortgage as an expense for federal tax deductions. There are strict levels of qualification for this type of federal tax deduction, however. If a person works at home, a separate computer must be used for work-related tasks. This means that a person should have a separate computer for personal use and another computer for work; one computer cannot be used for both processes.
Although a separate room is not needed for a “home office” when a person works at home, a section of one’s home should be set aside for work that is performed on a daily basis. This can be a small area of a person’s den or even a small section of the dining room. In addition, to qualify for rent and mortgage federal tax deductions for working at home, a taxpayer’s employer must not provide work space to the taxpayer. A person who takes their work home for convenience, will not qualify for a rent or mortgage federal tax deduction.
In most cases, clothing which is required for work is not qualified for a federal tax deduction. The main exception to this rule though, is that some jobs may require employees to purchase a specific uniform to wear to work or a specific type of clothing. In this instance, the specific uniforms or clothing may be tax deductible.
Expenses that are incurred during business trips, whether great distances or not are usually reimbursed by an employer. If they are not, they are a part of federal tax deductions. Costs for airfare, hotel expenses, and road travel are all eligible, though meals that are within reason are only deductible to 50 percent of the total costs. Conferences to educate employees or entertainment for clients should not be confused with travel expenses and should be listed under the appropriate category.
If a person receives education to further their expertise in their current profession, the expenses may be written off as a federal tax deduction, but only if the employer has not reimbursed the taxpayer for the expenses.
When a taxpayer is currently searching for a job within the profession in which they are in, any expenses incurred as a direct result of this search are eligible for a write-off. Expenses for job searching which are eligible usually include job agency expenses, resume preparation and supplies used to print it, any fees incurred for placing phone calls, postage expenses, and travel expenses for interviews.
Only certain facets of entertainment may be written off in a federal tax deduction. If a job entails keeping a client happy, entertainment events may be planned, such as golf outings. If an employer does not reimburse the taxpayer the expenses for such entertainment, it may be written off on a tax return for up to 50 percent of the cost. It must also be considered to be necessary for the type of position in which the employee works in.
A portion of union dues, which are considered to be miscellaneous deductions by the IRS, are eligible for federal tax deduction. This does not include expenses which are incurred through lobbying and other political actions. In general, union dues and other miscellaneous expenses that exceed 2 percent of a taxpayer’s adjusted gross income are deductible.