You’ve done your own taxes for years, and thanks to advances like TurboTax, you’ve done them flawlessly. So this year, you go to itemize your deductions, but you’re having trouble finding the form to list your employee business expenses.
Where Did Form 2106 Go and Why Can’t I Itemize My Employee Business Expenses?
That’s right, you’re not going crazy: Form 2106 has been removed from your software after tax year 2017.
President Trump’s sweeping tax law changes effective tax years 2018-2025 removed all itemized deductions that were subject to the 2% of AGI limitation. And unfortunately for all those that paid expenses at work out of pocket and were not reimbursed for them, these changes include those expenses.
Surely There Is Some Way I Can Deduct These Expenses! I Was Never Reimbursed For Paying Them!
Until 2026, there is no way for an employee to deduct these expenses on their tax return.
Self-employed individuals (those individuals issued 1099’s, not W-2’s) can still take these kinds of expenses on their individual tax returns on Schedule C.
The silver lining here is you may discuss setting up an accountable plan with your employer.
This allows your employer to reimburse you for all expenses you’ve paid out of pocket (including mileage), take a tax deduction for it, and do so all employment tax-free.
In other words, they can reimburse you without you or your employer being subject to tax.
There are some strict rules that separate this kind of reimbursement from being a qualified accountable plan from being a nonaccountable plan, which would subject the transaction to tax on both parties.
First, the arrangement has to be in writing. Next, it has to apply to every individual at the company and cannot only apply to executives or highly paid individuals.
This article is not intended to constitute tax or legal advice. For help regarding your specific situation, please consult a local advisor.
