Tips for Using the IRS Form 2106

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Tax helpJPGIf you have any expenses for businesses not covered by your employer, you may be able to file the IRS Form 2106 that allows you to make these deductions on your taxes. It is important to remember that this form is only used if you are an employee, not if you are a business owner or are self-employed. The important point to remember is that you must receive wages and a W-2 from the employer to use this form.

It is designed to allow employees to itemize business-related expenses that are not otherwise reimbursed by the employer. It is essential to avoid duplicating any items on the form if they are reimbursed by your employer.

Additionally, to use the form, you will need to ensure that the total amount of the deductions exceeds two percent of your total gross adjusted income. You may still be able to claim these deductions if the total amount is below two percent of AGI (adjusted gross income), but you will not be required to add the additional form.

Some of the expenses that can be claimed using the IRS Form 2106 include:

  • Client Entertainment – If you take clients out for business-related meals, business trips, or events, you may be able to claim this expense on the IRS Form 2106. There is a limit of 50 percent of the total that can be claimed, and it has to be directly related to business, and not a personal meeting, which determines if it is allowable or not.
  • Car expenses – If you use a personal car for business, you can either claim mileage or actual expenses. You can also claim parking fees, tolls, or other associated costs, but not vehicle repairs.
  • Other travel – In most cases, employers will reimburse employees for larger travel items such as flights, train tickets, or taxis as well as hotel costs to a reasonable accommodation rate. It is important to understand that luxury hotel stays will usually not be eligible for a claim. Other expenses related to travel such as dry cleaning and even gratuities can be claimed using the form.

It is important to talk to your accountant about your options for using IRS Form 2106. In many situations, there may be other methods to claim the expenses that are more appropriate given the specifics of your return.