Form 2106, Employee Business Expenses, is a tax form distributed by the IRS that allows certain employees to deduct ordinary and necessary expenses related to their jobs. Ordinary expenses are commonly accepted in a specific line of business, while necessary expenses are those that enable business conduct.
Starting from tax year 2018, unreimbursed employee business expenses are generally not deductible except for select groups: Armed Forces reservists, qualified performing artists, fee-based state or local government officials, and employees with impairment-related work expenses. Before 2018, any employee with unreimbursed work expenses could claim those expenses as miscellaneous itemized deductions.
Form 2106-EZ existed as a simplified version of Form 2106 but was discontinued following the Tax Cuts and Jobs Act (TCJA) of 2018.
Key Insights
- Form 2106 is for deducting ordinary and necessary job-related expenses.
- It applies to Armed Forces reservists, performing artists, certain government officials, and employees with impairment-related expenses.
- The form has two parts: Part I covers general expenses and reimbursements, and Part II covers vehicle expenses.
Who Can File Form 2106?
According to the IRS, the following taxpayers can use Form 2106:
- Armed Forces reservists
- Qualified performing artists
- Fee-based state or local government officials
- Employees with impairment-related work expenses
Before 2018, any employee with unreimbursed work expenses could use Form 2106 as a miscellaneous itemized deduction.
Taxpayers previously had two ways to claim job-related expenses as a tax deduction. However, tax reform eliminated the itemized deduction option when the Tax Cuts and Jobs Act came into effect in 2018.
How to File Form 2106
Form 2106 is divided into two parts:
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Part I tabulates all general employee business expenses and reimbursements. Expenses include vehicle costs, parking, tolls, transportation charges, and additional business expenses. Filers should also include any reimbursements made by their employers.
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Part II specifically covers vehicle expenses. Filers can choose between using the standard mileage rate or itemizing actual vehicle expenses. The standard mileage rate for 2024 is 67 cents per mile, up from 65.5 cents in 2023.
Actual expenses involve gasoline, oil, repairs, insurance, registration, and depreciation, but interest on car loans and the cost of commuting are not deductible. Specific tables in the IRS instructions guide the depreciation calculation and car valuation limits.
What Is IRS Form 2106 Used For?
IRS Form 2106 is designed to account for unreimbursed expenses accrued during a person’s job. It’s available to Armed Forces reservists, performing artists, fee-based government officials, and employees with impairment-related work expenses.
What Counts as Unreimbursed Job Expenses?
Unreimbursed job expenses include tools, education, clothing, insurance, home office costs, and professional dues or fees.
What Are the IRS Deductions for 2024?
For 2024, the IRS standard deduction is $14,600 for single taxpayers, up from $13,850 in 2023. For married couples filing jointly, the deduction is $29,200, up from $27,700 in 2023.
Conclusion
If you’re an Armed Forces reservist, a qualified performing artist, a fee-based state or local government official, or an employee with impairment-related work expenses, Form 2106 can help you deduct ordinary and necessary expenses linked to your job.
Related Terms: Business Expenses, Tax Deduction, Mileage Rate, Standard Deduction, Tax Cuts and Jobs Act.
References
- Internal Revenue Service. “Instructions for Form 2106”.
- Internal Revenue Service. “About Form 2106, Employee Business Expenses”.
- Internal Revenue Service. “Standard Mileage Rates”.
- Internal Revenue Service. “IRS Provides Tax Adjustments for Tax Year 2024”.
