IRS Form 2106: Deducting Business Travel Expenses

IRS Taxforms.net writes: Did you know that you don’t have to own your own business in order to claim business expense deductions?  That’s right- if you pay money for job-related things (usually travel) then use IRS Form 2106 to get a deduction. However, if your employer reimbursed you for the expenses then Form 2106 does not apply in your case.  But if your employer reimbursed you and also made you pay taxes on the reimbursement by including the amount in box 1 of your W2, then that is not considered reimbursement and you would indeed fill out IRS Form 2106.  Confused yet?  Read on.

What is an “Accountable Plan”?

If your employer makes you keep records and receipts of your business travel expenses and then that means you have an accountable plan for businesses expenses.  If this is the case, then you would not be bothering with IRS Form 2061.  If you were not reimbursed then you use Form 2106 for a business tax deduction.

If, as a result of business expenses you incurred for your job show up in Box 1 of your W2, you are getting “reimbursed” but it’s showing up as wages.  If your employer reimburses you for business expenses by increasing your wages, then you are paying taxes on that amount and therefore you are still entitled to a tax deduction even though you were reimbursed.  It’s all about whether or not your “reimbursements” show up in Box 1.  In other words, you shouldn’t be taxed on money you spent for your job.

IRS Form 2106 vs. Schedule A

Form 2106 is used in relation to Schedule A to figure your business deductions.

Generally speaking, Form 2106 is for job-related travel expenses for which you did not get reimbursed.  If you are claiming other business expenses then you would use Schedule A on your IRS Form 1040.  Remember, your job may have “reimbursed” you in the form of some extra wages, but in that case the amount would show up in Box 1 of your W2 statement, and therefore is not considered a reimbursement because you paid taxes on it.  You would still file Form 2106.

What goes on Schedule A instead of on IRS Form 2106?  Gifts, home office expenses, professional fees, tuition, etc.  Only the travel stuff like transportation and meals goes on Form 2106.

For a look at IRS Form 2106 visit the IRS website for the downloadable copy here.