Itemized Job-Related Deductions

• Most of the job-related expense deductions are only available to taxpayers who elect to itemize deductions on Schedule A. These can include any expense that results solely from your employment, but frequently taxpayers deduct the cost of uniforms their employers require them to purchase, the tools you purchase that are necessary for your work duties, gas and oil when you use a personal vehicle for the benefit of your employer and many of the travel expenses you incur on business trips such as hotels, transportation and some of your meals. If your employer reimburses you for any of these expenses, only the employer can claim a deduction for it. But if the employer does not reimburse you for those expenses, you need to evaluate whether it's worth itemizing to claim them instead of taking the standard deduction.
  
  

Taxable Reimbursement Allowances

• If the reimbursement policy of your employer provides you with a fixed allowance each year rather than making payment for each expense you submit, you can still claim the deductions, but only if the allowance is taxable. For example, suppose your employer estimates your work expenses to total approximately $5,000 per year and increases the first paycheck of each year for the allowance. In this case, the IRS will tax that allowance as if it's part of your ordinary salary. Because the allowance is taxable to you, rather than a tax-free reimbursement, you are eligible to claim a deduction for your job-related expenses.
  
  

Future Reimbursements

• Oftentimes, employer reimbursement policies require you to follow certain procedures to obtain a reimbursement. As a result, there may be a significant delay between the time you pay the expense and receive your reimbursement. If you claim a job-related deduction in one tax year but receive the reimbursement in the next, the IRS expects you to correct the deduction. One option is to amend the tax return to eliminate the deduction and make a payment for the increase in tax. Alternatively, you can increase your taxable income in the second tax year by the amount of the reimbursement. Either method will cure the error.
  
  

Tuition Reimbursements

• Many companies have separate reimbursement policies that cover the tuition employees pay to colleges and universities. If you take advantage of the educational reimbursements and your employer has a written plan that provides you with a maximum of $5,250 per year, the IRS will allow you to receive the reimbursement tax-free. However, you cannot use tuition costs the reimbursement covers to qualify for the lifetime learning or American opportunity tax credit.